Kintsugi, a Silicon Valley-based startup specializing in sales tax compliance automation, has secured $18 million in new funding led by Vertex, a global indirect tax technology solution provider. The startup aims to make its AI-enabled tax calculation and filing capabilities more accessible to small and medium-sized businesses.
The growing complexity of e-commerce and cross-border trade, coupled with increasingly intricate tax regulations, has fueled global demand for tax automation solutions. Kintsugi’s software integrates with various revenue-generating platforms such as Shopify, Stripe, and QuickBooks, providing a comprehensive view of revenue and enabling instant tax calculations.
“Our goal is to revolutionize tax compliance as Uber did for taxi services and Stripe did for credit card payments,” said Pujun Bhatnagar, Kintsugi’s co-founder and CEO, in an exclusive interview. “We want to simplify compliance across 171 countries.” Founded in 2023, Kintsugi was influenced by the 2018 Supreme Court ruling that allowed states to mandate online sellers to collect sales tax regardless of their physical presence.
The startup differentiates itself from existing automated tax compliance companies like Avalara by leveraging AI advancements. Bhatnagar explained that Kintsugi is “half the cost of Avalara” and can replace the need for a Certified Public Accountant (CPA). The startup’s app can be installed in seven clicks and three minutes, providing instant sales tax liability calculations.
Kintsugi offers free sales tax liability calculations but charges for tax filings. The company also provides an auto-remit feature for automated filings. Last year, Kintsugi generated $3 million in annual revenue and aims to reach $10 million by the end of 2025. The startup boasts a 0.1% churn rate among its 2,400 customers, which range from pre-revenue businesses to companies with up to $500 million in revenue.
Vertex’s investment in Kintsugi includes a $15 million minority stake representing 10% ownership and a commercial partnership based on a revenue-sharing model. An additional $3 million was raised from existing investors, valuing the startup at $150 million post-money. Vertex has also committed to investing $10-12 million in Kintsugi this year to utilize its AI integrations.
Kintsugi, which currently has profit margins exceeding 93%, plans to expand its operations to South America, Africa, and Eastern markets, including India and China. The partnership with Vertex is expected to help the startup diversify its customer base across various sectors. Currently, SaaS companies make up 45% of Kintsugi’s customer base, processing 5.5 million transactions valued at $7.7 billion.
