Levente Gyulai | Unsplash
The advancement of artificial intelligence has opened up a wide range of possibilities around technologies that could make it easier for us to fulfill our responsibilities. Depending on our commercial profile, it is likely that we will have to make calculations and proceed with the compliance of certain taxes applied based on the sales made. A process that has very important points, which automation provided by AI would facilitate.
E-commerce has had a great growth in recent times, so has its complexity due to changes in tax regulations. With this in mind, it is ideal to think of a solution based on automation, which means that today, there is a huge and constantly increasing demand. This is where a startup that could change everything comes in. Under the name Kintsugi, it is hoped that companies will manage to find a simplification of their obligations through automation.
It is a Silicon Valley-based company that is focused on offering services with respect to tax calculation and filing through AI. It had initially been founded in 2023 through a market opportunity based on an opportunity that would have to be seized. Under the backdrop of a Supreme Court ruling in 2018 that said that states could be free to compel online sellers to make collections on sales without the need to consider whether they had physical stores or not, it was the beginning of states having an alternative way to increase their tax collections by directly affecting e-commerce.
According to Pujun Bhatnagar, co-founder and CEO of Kintsugi, operating costs are half of what Avalara costs, and there is a displacement of the Certified Public Accountant (CPA). In addition, a common trader can do his tax liability through simple clicks, in a matter of a few minutes. Moreover, Bhatnagar says that the idea is to bring this technology to be implemented at the regulatory level in as many as 171 countries.
The sales tax calculation is performed free of charge, but it should be noted that in order to access the tax return, a fee will be charged. On the other hand, one of the available features is the option of automatic sending of the sales tax return; a process that calculates the data through different channels that contemplate what income was generated. The interesting thing is that Kintsugi can make its software integrate with platforms such as Shopify, Stripe, Chargebee, Quickbooks, as well as custom APIs.
Dimitri Karastelev | Unsplash
The above mentioned suggests a monitoring on business activities that takes into account revenue and data processing for the purpose of instant tax calculations.
Kintsugi is estimated to have raised a significant $18 million. The round has been led by Pennsylvania-based global indirect tax technology company Vertex, which sees Kintsugi's potential to scale a business model that appears to be booming. While Kintsugi's focus is on serving SME clients, Vertex thinks the collaboration could work if it targets large multinational companies, as well as the various types of complex businesses.
Financially, Kintsugi generated $3 million over the course of a year, and is expected to exceed $10 million by the end of 2025. The company itself is performing well, with a customer base of 2,400 customers and a churn rate of 0.1%. These companies have the particularity of generating revenues between $50 and $80 million dollars, but there are cases in which there is even talk of companies reaching revenues of $500 million dollars.
We had mentioned $18 million in financing. Well $15 million dollars corresponds to Kintsugi's 10% stake, shared use of intellectual property and a commercial alliance based on revenue sharing. The other $3 million corresponds to sums from existing investors. This brings the startup's total valuation to $150 million, a huge jump from the company's November valuation of $80 million. Other news is that Vertex plans to make $10 million to $12 million in equity investments in Kintsugi this year to make use of the intellectual property for AI integrations.
Kintsugi is growing rapidly if we look at the indications that ensure the potential that several firms credit it with and which are confident in investing in its startup. The company has been able to expand into the U.S., Canada and Europe, and plans to continue its operations in South America, Africa and Asian countries. There is also a customer base that represents 45% of SaaS (Software as a Service) companies, which have achieved more than 5.5 million transactions that are valued at $ 7.7 billion dollars. Vertex is likely to continue to be the catalyst for Kintsugi's growth.
- Main image edited in Canva.
- Information consulted in decrypt.co.
- Translated to English with DeepL.