Why AI Hasn’t Broken Through in the $145B Accounting Sector

Accounting sits at the core of every business. It is a $145 billion industry, yet unlike marketing, HR, or even law, it has seen little disruption from startups or AI. Why? The answer is not only technical limitations. It is cultural, structural, and tied to the nature of the buyer.

We recently hosted an internal session with two founders tackling this space. The takeaway: accounting is ripe for innovation, but disruption will move more slowly than in other industries.

A Conservative Culture Slows Change

It has been widely covered that the industry is facing a shrinking labor force. More than 300,000 accountants have left the profession, fewer graduates are entering, and the traditional partner-track incentives have weakened with an increased number of PE acquisitions. In theory, this level of shrinkage should create urgency for automation.

The question we asked ourselves was: why isn’t this massive labor pressure generating faster adoption? One founder explained that accountants have a high tolerance for pain and a culturally conservative mindset. She confirmed the labor shortage but noted that it alone is not enough to drive adoption. The industry also has strong client retention, and clients tolerate slow improvements, which reduces competitive pressure.

As a result of this risk-averse mindset, many accounting firms are waiting for incumbents like Thomson Reuters or Intuit to deliver AI. As one founder put it:

“Many firms would rather choose a 60 percent effective incumbent over a 90 percent effective startup because of perceived vendor risk.”

Why AI Stumbles in Accounting

Another barrier is technical. Core accounting workflows depend on numerical logic and judgment, areas where large language models remain unreliable, costly, and slow.

Contrast that with law firms, which are equally conservative but driven by text-based workflows where LLMs excel. 

Advice for Founders: Sell Outcomes, Not AI

The strongest advice from founders in the space: do not sell AI, sell outcomes. Keep the technology in the background. Accountants are skeptical for good reason since many solutions have failed to deliver.

One key element is the importance of product and UI. Any solution must offer step-by-step reasoning so accountants can audit results and build trust. Products must include human oversight from the start, as anything promising full automation in a black-box way will not work in this space. 

Winning an early top-20 firm is disproportionately valuable. In this market, credibility and senior relationships matter more than in other industries where reference customers are helpful but not essential.

Still, the structure of the industry makes firm sales tough. The Big 4 control over $100 billion in combined revenue, with a long tail of smaller players. A more attractive near-term market may be in-house finance teams. They move faster, tolerate risk, and while contracts are smaller, adoption cycles are quicker.

Finding Wedges That Work

Because accounting demands extreme accuracy, LLMs will not replace core workflows soon. But founders can win trust by targeting lower-friction, operational text-based use cases: inbox triage, client Q&A prep, summarization, and data collection.

While they likely command lower ACV, they are easier to sell, help prove ROI, and build customer trust, eventually opening the door to core numerical workflows.

Change Will Come, Just Not Overnight

Accounting adoption will be slower than in other industries given the risk-averse nature of these buyers. But the reality is the industry faces a shrinking workforce and desperately needs innovation. We remain optimistic on the opportunity, especially with founders who understand the buyer mindset, often former CPAs themselves, and who are strategic in their initial wedge and thoughtful in how they expand into broader markets over time. If you are building in this space, we would love to hear from you.