Ben Franklin once said that in this world nothing can be said for certain except death and taxes. But that doesn’t make managing either particularly natural and easy. Technology is racing to fill that void, and today, a Berlin-based startup called Taxfix, which built a popular mobile assistant to meet the first of them, announces a major fundraising to fuel its growth. It closed a $220 million Series D at a valuation of over $1 billion, money the startup will use to both integrate more products and expand its customer touchpoints beyond the market. annual use at tax time; and to expand into new markets beyond its current footprint in Germany, Spain and Italy.
The funding is being led by Teachers’ Venture Growth, the renowned venture capital fund of the Ontario Teachers’ Pension Plan Board (a prolific investor in technology for years), with participation from former backers Index Ventures, Valar Ventures, Creandum and Redalpine. (Index led its Series C in 2020; Valar led a round in 2018). This is a major funding round for the startup: Taxfix has raised approximately $330 million since its inception in 2016.
The concept of the business is very simple, played mainly simply for people who do not have complicated tax profiles with different assets or other sources of money in the balance. It’s free to use the app to check your tax situation, and to do so, you just need to take a snapshot of a payslip and fill in a few other details and Taxfix does the rest of the work for you. To then file your taxes through this as an individual costs €39.99 or €59.99 as a couple.
Taxfix is not a business process automation startup per se, but it takes a position as such, by creating its products for the consumer market:
“We hacked the brains of a tax accountant into codes,” notes CEO Martin Ott.
The startup has so far seen “millions” of downloads of its app across its three current markets of Germany, Spain and Italy, representing more than $1 billion in tax refunds for those who complete their forms using its mobile assistant.
Notably, however, Taxfix does not disclose how many customers it currently has, although you can partly understand why: metrics such as monthly or daily active users (a classic metric for consumer-focused mobile apps, what is) are difficult to quantify for a product that is realistically only used en masse once a year – a concept that Ott, who joined last year after serving as vice president and CEO of Central Europe of none other than Facebook, will understand very well. This is indeed one of the reasons to raise this funding, and to raise as much: to create more products to extend this life cycle.
Ott wouldn’t be too specific about what comes first and when beyond saying “later this year,” but the ideas he mentioned in an interview included expense management tools throughout the year. year, which is useful for those who are self-employed and may want to follow receipts more closely before filing; and options for people to take tax revenues and invest them elsewhere. Taxfix, as you’d expect, prefers to talk about good news about tax filing – it’s easy! and it is often free money that is due to you! – so Ott wasn’t keen on talking about how much money he calculated people owed the state, but there’s an opportunity here too to provide longer-term funding and management of that funding as another type of product.
The challenge that Taxfix was designed to meet – and those who first built it, its original founders, Mathis Büchi and Lino Teuteberg, are still with the company, as President and CPO respectively – was that, as TVG MD Avid Larizadeh Duggan described it, is that many people associate taxes with anxiety. “It’s complicated and people are afraid of the outcome,” she said. The solution was simple: create an application “to make something complicated enjoyable”. I don’t know if I would ever use that word to describe the process of dealing with taxes, but very few of us know how a few simple mobile tricks can actually turn mundane things into fun activities.
And there’s a great opportunity in the market to do so for something as deeply mundane, anxiety-provoking, and generally complicated as taxes. Turbotax, Intuit’s big product in the US that’s kind of a competitor (alongside the states’ own filing systems, and a number of other accounting platforms, and other startups like Taxscout ), was launched as early as the 1980s, and it continues to grow at a rate of 5-10%, Duggan pointed out. It’s a sign of how there’s not just market share in place to take away, but new users popping up all the time.
Turbotax is also informative for another reason: it really isn’t extended outside of the United States, which speaks volumes about the complexity of building these products and perhaps indicates a reason why Taxfix doesn’t is not much developed itself.
Ott would not be determined on which markets the company will tackle next, except to point out that it focuses on countries where state systems are difficult to use, and that there are not many alternatives on these markets currently to solve this problem.