Where have all the accountants gone?
Between 1990 and 2021, the number of people taking the Certified Public Accountant exam dropped by almost 50%, according to the Association of International Certified Professional Accountants.
With fewer young people entering the field and a wave of Baby Boomers retiring, the Bureau of Labor Statistics reports there are 340,000 fewer accountants now than five years ago.
The talent drought has sparked an industry crisis, blamed on tough education requirements, sluggish pay, and competition from flashier business school paths like investment banking and consulting.
This shortage isn’t just a headache for accounting firms struggling to recruit. It’s hitting the businesses they serve—especially startups and small businesses—where it hurts.
In many early-stage companies, accountants double as financial advisors. In today’s tricky economic environment, with high interest rates, rising costs, and tight margins, professional guidance is crucial.
Yet, with fewer accountants available, firms are struggling to meet demand, leaving founders in the lurch.
“Small businesses are out there going: I need this help. It’s a tougher economy today,” says Ben Richmond, a CPA managing U.S. clients for Xero, a small-business accounting software platform. “The challenge is a lot of the firms aren’t either resourced with the right technology or enough people to get to that.”
“You’ll have no issue finding someone to do your tax return,” he explains. “But if you want the help of a true business partner or an advisor, that’s where there’s not as many firms out there,” he adds. “Firms are struggling to get through just the basic workload they have.”
“It is scary in the U.S. when you look at how many people don’t actually know what their cash flow looks like 30, 60, 90 days out,” he says. “You’ve got all these businesses out there that are operating blind.”
Filling the CPA Gap
Enter a new generation of startups aiming to solve this problem with AI. Investors are excited. Andreessen Horowitz calls the talent-strapped industry ripe for disruption.
“Bookkeeping, accounting, tax preparation, and auditing are fields full of largely formulaic and repetitive exercises that would immensely benefit from generative AI’s gift of efficiency and time savings.” wrote partners Marc Andrusko and Seema Amble in a June report.
Other VCs agree. Last November, San Francisco-based Puzzle secured $30 million for its AI-powered accounting platform, bringing its total funding to $50 million.
In March, New York-based Fundguard raised $100 million for its AI accounting software for asset managers. In June, Klarity, which automates tasks like document review, closed a $70 million Series B round.
One of the newer players, JustPaid, launched in 2020. The Bay Area startup uses AI to automate bill pay and invoicing—tedious tasks that usually require more internal accountants or outside help.
In January, the company introduced its GPT app, connecting to banking, Stripe, and QuickBooks accounts to answer financial questions about burn rate, top revenue sources, and revenue changes.
Co-founders Daniel Kivatinos, Anelya Grant, and Vinay Pinnaka started the company after experiencing the accountant shortage in Silicon Valley firsthand.
“We saw the problem ourselves. All of us have been in the startup industry for a long time,” says Kivatinos, who also serves as CEO. “I’ve seen a lot of startups struggle to find the appropriate people, where they’re just basically running some of the finance operations themselves.”
Their tool isn’t about replacing CPAs but helping them manage more with less. “As the shortage gets worse and worse, AI is going to be picking up some of the slack,” says Kivatinos.
Even with significant capital, these startups face competition from established firms. Grant Thornton, the U.S.’s seventh-largest accounting firm, is also leveraging AI.
In February, the Chicago-based firm unveiled its Gen AI tool, built with Microsoft technology.
As Grant Thornton’s Chicago market managing partner Arla Lach told Inc., “We’ve seen this coming for a long time.”
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