Khosla Ventures is betting $10M on Ian Crosby, whose last startup, Bench, imploded

Khosla Ventures has invested $10 million in Synthetic, a startup founded by Ian Crosby to develop fully autonomous AI bookkeeping technology, despite Crosby’s previous startup, Bench, collapsing in 2024.

The seed funding round was led by Khosla Ventures, with participation from Basis Set Ventures and Shopify CEO Tobias Lütke. Crosby’s new company aims to automate bookkeeping entirely, generating accrual-based financials without human input, although the product remains in the design stage.

Crosby’s previous startup, Bench, filed for insolvency in 2024 after a period of financial decline, and Crosby was ousted from the company in 2021. Despite this, Khosla partner Jon Chu expressed confidence in Crosby’s potential, citing his willingness to take risks and learn from past mistakes.

Crosby emphasizes that Synthetic’s goal is to create a fully autonomous system, though he admits current AI models still make significant errors. He compares the technology’s development to a self-driving car that can navigate a single street versus any street, acknowledging the technical challenges ahead.

Why It Matters

This investment highlights a willingness among venture capitalists to back high-risk, high-reward AI innovations despite founders’ previous failures. It also signals a potential shift in the accounting industry toward fully automated solutions, which could disrupt traditional firms reliant on human accountants.

For readers, this underscores the ongoing evolution of AI in enterprise services and the appetite for bold ventures even when past ventures have failed, reflecting both the risks and opportunities in AI-driven startups.

Background

Ian Crosby’s previous startup, Bench, was a prominent online accounting platform that struggled with financial sustainability and was ultimately sold for parts in 2024. Crosby’s departure from Bench followed disagreements with the board, and the company’s subsequent collapse was attributed to management issues and market challenges.

After Bench, Crosby joined Shopify and founded Teal, which was acquired by Mercury within 18 months. His recent focus has been on developing AI technology capable of fully automating bookkeeping tasks, an area with significant technical hurdles but high potential for disruption.

“I tend to run towards controversy a little bit. In controversy, groupthink often shapes the narrative rather than the truth of the story itself.”

— Jon Chu, Khosla Ventures partner

“We’re not going to release anything that’s not fully autonomous. It’s that or bust.”

— Ian Crosby

What Remains Unclear

It is still unclear how well Synthetic’s prototype will scale for broader customer bases, given current AI limitations and error rates. The company’s long-term viability depends on overcoming significant technical challenges and proving the system’s reliability in real-world scenarios.

What’s Next

Synthetic plans to continue refining its AI model, aiming to demonstrate broader usability and reliability. The company may seek additional funding or partnerships as it progresses toward a commercial launch, expected within the next 12-18 months.

Key Questions

Why did Khosla Ventures invest in Ian Crosby despite his previous startup’s failure?

Khosla partner Jon Chu stated that he tends to support controversial ventures, believing that growth often comes from taking risks and learning from mistakes. He sees potential in Crosby’s vision and experience, despite past setbacks.

What is Synthetic’s main goal?

Synthetic aims to build a fully autonomous AI system capable of handling all aspects of bookkeeping without human intervention, targeting primarily startups and small businesses.

What are the main challenges Synthetic faces?

The primary challenge is achieving sufficient accuracy and reliability with current AI models, which still make significant bookkeeping errors. Scaling the prototype to broader markets remains uncertain.

Will Crosby’s previous failure impact investor confidence long-term?

While some may view it as a risk, Khosla Ventures and others appear to believe Crosby’s subsequent roles and learning experiences mitigate concerns, emphasizing his commitment to innovation and growth.