San Francisco-based start-up, Kintsugi, is set to announce a $6 million Series A funding round today, valuing the company at around $40 million. Founded in 2021 by CEO Pujun Bhatnagar, Kintsugi assists businesses with sales tax compliance through its software. The funding will be led by Link Ventures, with participation from Venture Highway, KyberKnight, Plug and Play, DeVC, and various angel investors.
Kintsugi’s software helps businesses automate their compliance with sales tax regulations, which have become increasingly complex in the US in recent years. Failure to report the correct sales tax data or pay what is owed can result in significant penalties, costs, and reputational damage. CEO Bhatnagar emphasizes that while achieving compliance may not generate revenue for businesses, the technology can help them reduce the hundreds of hours typically spent each year on this task.
The challenges facing US businesses in dealing with sales tax compliance were exacerbated by a 2018 Supreme Court ruling. Since then, even online sellers are required to collect and remit sales tax to the jurisdictions where it is due. Businesses must identify the location of each customer to determine the correct amount of sales tax to charge. Furthermore, they need to be registered to pay sales tax in every jurisdiction where they have customers and ensure that taxes collected are remitted on time. The complexity of the rules, particularly for smaller businesses, has made compliance challenging and costly.
Kintsugi’s solution is a software that supports users at the point of sale, automatically collecting necessary information to calculate the applicable sales tax on each transaction. The software also facilitates businesses’ connection to the jurisdictions where they must pay taxes, allowing them to register and pay their dues. This not only saves businesses time and money but also ensures compliance with tax regulations. The software is driven by a machine learning engine that constantly scans the web for updates on sales tax regimes to ensure accurate calculations according to current rules.
Co-founded by Bhatnagar, Barkin Doganay, and Jeff Gibson, Kintsugi leverages their expertise in machine learning, finance, and technology to address the challenges businesses face in sales tax compliance. With around 300 customers and 800 million transactions processed, the company plans to expand beyond the US into Canada, the UK, and Europe using the funding raised. Investors see potential in Kintsugi’s approach, as businesses are increasingly seeking help with sales tax compliance, which can be time-consuming and complex.
Investors like Link Ventures see the value in Kintsugi’s use of AI to streamline and automate the sales tax compliance process, freeing up businesses to focus on their core operations. Kintsugi’s technology eliminates the manual labor required to keep track of changing laws and calculations on city, county, and state levels, making compliance faster and easier. With the funding secured, Kintsugi aims to scale its operations and help more businesses navigate the complexities of sales tax regulations across different jurisdictions globally.
