Ben Franklin once famously said that in this world nothing can be said for sure except death and taxes. But that doesn’t make dealing with either particularly natural and easy. Tech is rushing to fill that gap, and today a Berlin-based startup called Taxfix, which built a popular mobile assistant to address the former, is announcing a major round of funding to boost its growth. It has closed a $220 million Series D with a valuation of more than $1 billion, money the startup will both use to build in more products to expand its touch points with customers beyond its annual tax time usage; and to expand into new markets beyond the current presence of Germany, Spain and Italy.
Funding is led by Teachers’ Venture Growth, the rebranded venture fund the Ontario Teachers’ Pension Plan Board (a prolific investor in technology for years), with past backers Index Ventures, Valar Ventures, Creandum and Redalpine. (Index led its Series C in 2020; Valar led a round in 2018). This is a big round for the startup: Taxfix has raised about $330 million since its inception in 2016.
The concept of the company is very simple and usually played simple for people who do not have complicated tax profiles with different assets or other sources of money on the balance sheet. It is free to use the app to view your tax situation. To do this, simply take a snapshot of a payslip and fill in a few more details and Taxfix will do the rest of the work for you. Then to file your tax return as an individual, it costs $39.99 or $59.99 as a pair.
Taxfix isn’t necessarily a business process automation startup, but it takes something of the same stance when building its products for the consumer market:
“We hacked a tax accountant’s brain into codes,” notes CEO Martin Ott.
The startup has so far had “millions” of downloads of its app in the three current markets of Germany, Spain and Italy, amounting to more than $1 billion in tax refunds for those who fill out their forms using the mobile assistant.
Notably, Taxfix doesn’t disclose how many customers it currently has, though you can partially understand why: metrics like monthly or daily active users (a classic metric for consumer-facing mobile apps, which this is) are hard to quantify for a product that realistically only once a year is massively used – a concept that Ott, who last year joined a VP and MD of Central Europe of none other than Facebook, will understand very well. Indeed, that’s one of the reasons for raising this funding, and so much of it: to build more products to extend that lifecycle.
Ott wouldn’t be too specific about what comes first and when, except “later this year,” but the ideas he mentioned in an interview include expense management tools throughout the year, which is useful for those who are self-employed and may want to track receipts more carefully before submitting; and options for people to take tax windfalls and invest them elsewhere. Taxfix, as you might suspect, prefers to talk about the good news stories about tax returns – it’s easy! and it is often free money that you owe! — so Ott didn’t want to talk about how much money it charged people owed to the state, but there’s also an opportunity to provide financing and manage that longer-term financing as a different kind of product.
The challenge Taxfix was built to face – and those who first built it, the original founders, Mathis Büchi and Lino Teuteberg, are still with the company, as chairman and CPO respectively – was that, as TVG MD Avid Larizadeh Duggan described it is that many people associate taxes with fear. “It’s complicated and people are afraid of the outcome,” she said. The solution was simple: create 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 few of us aren’t familiar with how a few simple mobile tricks can turn everyday things into fun activities.
And there’s a great opportunity in the market to do that for something as mundane, terrifying and generally complicated as taxes. Turbotax, Intuit’s big product in the US that’s sort of a competitor (alongside states’ own filing systems and a number of other accounting platforms and other startups like Taxscout), was started way back in the 1980s and is still growing at a rate of 5 -10%, Duggan noted. That is a sign of how not only the existing market share needs to be taken away, but new users are constantly emerging.
Turbotax is also instructive for another reason: it really hasn’t expanded outside of the US, which says something about the complexity of building these products and perhaps points to a reason why Taxfix itself hasn’t expanded much.
Ott wouldn’t want to know which markets the company will address next, except to point out that it’s targeting countries where state systems are difficult to use, and there aren’t many alternatives in those markets right now to address that problem. to take.