Ben Franklin once said that nothing in this world can be said to be certain except death and taxes. But that doesn’t make dealing with either particularly natural and easy. Technology is rushing to fill that gap, and today a Berlin-based startup called Taxfix, which has created a popular mobile assistant to tackle the first of these, is announcing a big funding round to fuel its growth. It has closed a $220 million Series D at a valuation of more than $1 billion, money the startup will use to build more products to extend its touchpoints with customers beyond annual tax-time use; and expand into new markets beyond its current footprint of Germany, Spain and Italy.
The funding is led by Teachers’ Venture Growth, the renowned Ontario Teachers’ Pension Plan Board venture fund (a prolific investor for years in technology), with participation from previous backers Index Ventures, Valar Ventures, Creandum and Redalpine. (Index led their Series C in 2020; Valar led one round in 2018.) This is a significant round for the startup: Taxfix has raised around $330 million since it was founded in 2016.
The concept of the company is very simple, developed mainly for people who do not have complicated tax profiles with different assets or other sources of money on the balance sheet. Using the app to check your tax status is free, and to do so, simply take a snapshot of a payment receipt and fill in a few more details and Taxfix will do the rest of the work for you. So filing your taxes through that as an individual costs €39.99 or €59.99 as a couple.
Taxfix is not a business process automation startup per se, but it does take some of the stance as such, building its products for the consumer market:
“We’ve hacked the brain of a tax accountant into code,” says Ott.
The startup has had “millions” of downloads of its app in its current three markets of Germany, Spain, and Italy so far, representing more than $1 billion in refunded taxes for those who fill out its forms with its mobile assistant. .
Notably, though, Taxfix doesn’t disclose how many customers it currently has, though you can understand why: metrics like monthly or daily active users (a classic metric for consumer-centric mobile apps, that is) are hard to quantify for a product. which is only realistically used en masse once a year, a concept that Ott, who joined last year after serving as vice president and CEO of Central Europe for none other than Facebook, will understand all too well. In fact, that’s one of the reasons for raising this funding, and raising so much: to build more products to extend that lifecycle.
Ott wouldn’t be too specific about what will come first and when beyond saying “later this year,” but the ideas he mentioned in an interview included tools for year-round expense management, which is helpful for those who work on their own and might want to track receipts more carefully before filing them away; and options for people to take tax windfalls and invest them elsewhere. Taxfix, as he might suspect, prefers to talk about the good news about filing taxes: it’s easy! and he is often owed free money! — So Ott wasn’t willing to talk about how much money he figured people owed to the state, but there’s also an opportunity there to provide funding and long-term management of that funding as a different kind of product.
The challenge for which Taxfix was built (and those who first built it, its original founders, Mathis Büchi and Lino Teuteberg, are still with the company, respectively as president and CPO) was that, as described by TVG MD Avid Larizadeh Duggan , is that many people associate taxes with anxiety. “It’s complicated and people are afraid of the outcome,” he said. The solution was simple: make an app “to make something complicated delicious”. I don’t know if I’d ever use that word to describe the process of dealing with taxes, but very few of us aren’t familiar with how a few simple mobile hacks can turn mundane things into fun activities.
And there is a huge opportunity in the market to do that with something as profoundly mundane, anxiety-provoking and generally complicated as taxes. Turbotax, Intuit’s big product in the US that is something of a competitor (along with the states’ own filing systems and a host of other accounting platforms and other startups like Taxscout), was started in the 1980s and still growing. at a rate of 5% to 10%, Duggan said. That’s a sign that not only is there current market share to take away, but new users are popping up all the time.
Turbotax is also instructive for another reason: it hasn’t really caught on outside of the US, which says something about the complexity of building these products and perhaps points to a reason why Taxfix hasn’t caught on that much.
Ott didn’t elaborate on which markets the company will address next, except to note that it’s targeting countries where state systems are difficult to use, and there aren’t currently many alternatives to address that problem.