Ben Franklin once famously said that in this world nothing can be said to be safe except death and taxes. But that does not make it very natural and easy to deal with. Tech is rushing to fill that gap, and today a Berlin-based startup called Taxfix, which has built a popular mobile assistant to address the former of these, is announcing a major round of funding to boost growth. It has closed a $ 220 million Series D worth over $ 1 billion, money that the startup will use both to build more products to expand its touchpoints with customers beyond annual use around tax time; and to expand into new markets beyond its current footprint in Germany, Spain and Italy.
Funding is led by Teachers ‘Venture Growth, the renamed venture fund Ontario Teachers’ Pension Plan Board (a productive investor for years in technology), in which former backers Index Ventures, Valar Ventures, Creandum and Redalpine also participate. (Index led its Serie C in 2020; Valar led a round in 2018). This is a big round for startups: Taxfix has raised around $ 330 million since it was founded in 2016.
The concept of the company is very simple, played out most simply for people who do not have complicated tax profiles with different assets or other sources of money in the balance sheet. It’s free to use the app to check your tax situation, and to do so, just take a snapshot of a payslip and fill in a few more details, and Taxfix does the rest of the work for you. It costs € 39.99 or € 59.99 as a couple to report your tax through it as an individual.
Taxfix is not a start-up of automation of business processes per se, but it takes some of the attitude as one when building its products for the consumer market:
“We have hacked the brains of a tax auditor into codes,” notes CEO Martin Ott.
The startup has had “millions” of downloads of its app across its three current markets in Germany, Spain and Italy so far, and has worked on over $ 1 billion in tax refunds for those who fill out their forms using its mobile assistant .
However, it is noteworthy that Taxfix does not reveal how many customers it currently has, although you can partly understand why: measurements as monthly or daily active users (a classic measure of consumer-focused mobile apps, which this is) are difficult to quantify for a product that realistically is only used a lot once a year – a concept that Ott, who came up with last year from being VP and MD in Central Europe for none other than Facebook, will understand very well. It’s actually one of the reasons to raise this funding and raise so much of it: to build more products to extend this life cycle.
Ott would not be too specific as to what comes first and when in addition to saying “later this year,” but ideas he mentioned in an interview included spending management tools throughout the year, which is helpful to them, who are self-employed and may want to track receipts more carefully before filing; and opportunities for people to take tax breaks and invest them elsewhere. Taxfix, which you may suspect, prefers to talk about the good news stories around tax filing – it’s easy! and it’s often free money you owe! – So Ott was not keen to talk about how much money it calculated people owed the state, but there is also an opportunity there to provide financing and long-term management of that financing as a different kind of product.
The challenge that Taxfix was built to solve – and those who first built it, its original founders, Mathis Büchi and Lino Teuteberg, are still in the business, respectively as chairman and CPO – was that as TVG MD Avid Larizadeh Duggan described that is, many people associate tax with anxiety. “It’s complicated and people are scared of the outcome,” she said. The solution was simple: make an app “to make something complicated nice.” I do not know if I would ever use that word to describe the process of dealing with taxes, but very few of us are unfamiliar with how a few simple mobile tricks can actually turn worldly things into fun activities.
And there is a great opportunity in the market to make it for something as deeply banal, anxious and generally complicated as taxes. Turbotax, Intuit’s major product in the United States, which is a kind of competitor (along with the states’ own filing systems and a number of other accounting platforms and other startups like Taxscout), was started as far back as the 1980s and is still growing. at a rate of 5-10%, Duggan pointed out. It is a sign of how not only are there established market shares to take away, but new users are popping up all the time.
Turbotax is also instructive for another reason: it really is not expanding outside the US, which says something about the complexity of building these products and perhaps points to a reason why Taxfix has not expanded much itself.
Ott will not be drawn out of which markets the company will address next time, except to point out that it focuses on countries where state systems are difficult to use and there are not many alternatives in these markets at present to to solve this problem.