Kintsugi, a Silicon Valley-based startup that helps businesses offload and automate sales tax compliance, has raised $18 million in new funding, led by global indirect tax technology solutions provider Vertex. Startups are planning to enable more small and medium-sized businesses to use AI-enabled features to calculate and submit taxes.
The continued growth of e-commerce and cross-border trade, coupled with increasingly complex tax regulations, drives global demand for tax automation solutions. Kintsugi aims to help businesses with software that integrates with revenue-making points, such as Shopify, Stripe, ChargeBee, QuickBooks, or custom API implementations. This helps to bring 360 views of revenue, allowing startups to ingest data and calculate taxes instantly.
“Our goal is something like what Uber did for taxis and stripes to pay for credit cards. We want to do that in some of the compliance in 171 countries,” Kintsugi co-founder and CEO Pujun Bhatnagar (pictured above), said in an exclusive interview.
The San Francisco-based startup, founded in 2023, has considered the 2018 Supreme Court ruling. It impacted e-commerce businesses and helped the state to expand collection. Existing automated tax compliance companies, including Avalara, have leveraged shifts to generate revenue. However, new era startups like Kintsugi have begun to leverage advances in AI to open up market share.
“We’re half the cost of Avalara and we’re also replacing CPAs (certified public accountants). So, a regular operator can only install the app in 7 clicks and three minutes and tell us what your sales tax obligation is.
With startups, companies charge for tax returns, but companies can calculate sales tax liabilities for free. It also offers the option to turn on automatic remittances that automatically submit automatic taxes after calculating data to be taken through various revenue generating channels.
Kintsugi generated $3 million in annual revenue last year, aiming to exceed $10 million by the end of 2025. The startup also advertises with a 0.1% churn rate with a location of 2,400 customers.
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The Pennsylvania-based pinnacle found Kintsugi complements its existing focus on large multinationals and complex mid-market businesses.
“We at Vertex have a relationship with some of the world’s largest companies running marketplaces that run e-commerce businesses, and today we are not a business serving small and medium-sized businesses.” “Kintsugi is very professional and very good and can expand its business model.
The terms and conditions include a $15 million minority investment representing a 10% ownership in Kintugi, IP sharing and commercial partnerships based on a revenue sharing model. The startup also raised an additional $3 million from existing investors. Overall, the new funding valued startups that cost $150 million from $80 million valued in November.
In addition to investing in Kintsugi, Vertex is committed to investing between $10 million and $12 million in advances in AI. The company plans to use Kintsugi’s IP to advance development of these AI-centric products.
“We’re already investing in AI, but we’re a public company with quarterly pressure,” Patel said. “So we can accelerate some of that by leveraging the innovation that’s happening in Kintsugi.”
Kintsugi already has a profit margin of over 93%, Bhatnagar told TechCrunch.
The startup, which previously expanded from the US to Canada and Europe, employs 95 people, is currently planning to live in South America, Africa and the Eastern world, including India and China.
Currently, SAAS companies account for 45% of Kintsugi’s customer base, with $5.5 million in transactions of $7.7 billion. However, a partnership with Vertex, a 47-year-old investor, could help startups acquire customers through a variety of sectors.
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