Khosla Ventures backs Ian Crosby’s Synthetic in $10 million seed round despite Bench Accounting collapse

Khosla Ventures has led a $10 million seed funding round for Synthetic, a startup founded by Ian Crosby that aims to develop a fully autonomous AI bookkeeping service. The round includes participation from Basis Set Ventures and Shopify CEO Tobias Lütke. Synthetic intends to generate accrual-based financials for software startups without human involvement, a significant departure from the hybrid models currently employed by competitors such as Xero.

The investment has drawn scrutiny given Crosby’s history with Bench Accounting, which collapsed in 2024 before being acquired for a nominal amount. Critics question the technical feasibility of a fully autonomous system, noting that current foundational AI models are prone to significant errors. Crosby acknowledges these limitations, comparing the current state of the technology to a self-driving car that can navigate only one specific street rather than any road.

Khosla Ventures partner Jon Chu defended the investment, stating he is willing to run towards controversy where groupthink may obscure the truth. Chu cited the career trajectory of Parker Conrad, who was ousted from Zenefits in 2016 before founding Rippling, now valued at nearly $17 billion. Chu argued that Crosby has demonstrated growth through his subsequent roles at Shopify and his founding of Teal, an accounting startup acquired by Mercury 18 months later.

Crosby maintains he was not directly responsible for Bench’s insolvency, attributing the failure to new management’s inability to restore the company after his dismissal in 2021. His departure followed a disagreement over strategic direction and cash burn, occurring three months after he rejected a $250 million acquisition offer from Brex. Chu noted that executives who worked with Crosby post-Bench provided positive feedback during due diligence.

Synthetic is currently in the design phase and plans to serve only AI and other software startups. Crosby stated the company will not release any product that is not fully autonomous, describing the approach as "that or bust." He indicated that the startup has raised sufficient capital to wait for foundational models to become more reliable, though it remains unclear how the prototype will scale beyond its current narrow user group.