Paying sales tax should be straightforward, but it's a complex, time-consuming task that poses significant challenges for businesses. This complexity increases as companies grow and attract more customers across state lines.
Addressing this issue, fintech startup Kintsugi AI announced a $6 million Series A funding round today, valuing the company at $40 million. Led by Link Ventures, the round also saw participation from Venture Highway, KyberKnight, Plug and Play, DeVC, and notable angel investors.
Kintsugi AI plans to use the funds to enhance its tax automation platform, particularly focusing on automated VAT solutions for Canada and Europe to support international sales.
"We aim to help over 27 million e-commerce and SaaS businesses worldwide save time and money by automating their sales tax processes," said Pujun Bhatnagar, CEO and co-founder of Kintsugi AI. "Tax complexity is only increasing, and manual processes will inevitably fail to scale without the right tools. That’s where Kintsugi comes in."
Kintsugi was founded by Pujun Bhatnagar, a Stanford graduate and former Facebook machine learning engineer, Barkin Doganay, a former analyst at Credit Suisse and Goldman Sachs, and Jeff Gibson, a previous Atlassian executive and MonetizeNow CTO. The startup was launched in 2021, following a significant 2018 Supreme Court ruling that allowed states to require remote sellers to collect and remit sales tax, thereby complicating the sales tax landscape.
Navigating this complex web of regulations manually can be tedious, confusing, and costly for businesses operating across multiple states, with non-compliance penalties reaching up to 25% of the tax amount. Kintsugi AI's platform automates sales tax compliance through features like real-time nexus monitoring, AI-enabled product categorization, precise tax calculation, sales tax registration, filing, exemption certificate handling, and back-tax compliance.
Kintsugi's system verifies transactions through its real-time rules database, tracks economic nexus, identifies appropriate tax rates, and simplifies end-of-month remittance and filing of sales tax returns across applicable states. The platform is powered by a large language model trained on sales tax regulations across 110,000 jurisdictions.
"Kintsugi addresses a real need; 48% of states rely on sales tax as a major revenue source. With sales tax defined and collected at city, county, and state levels, manual compliance is time-consuming and requires tracking ever-changing laws," said Lisa Dolan, Managing Partner at Link Ventures. "Kintsugi uses AI to streamline compliance and automate the process, allowing companies to focus on their core operations instead of tax paperwork."
Bhatnagar emphasized Kintsugi's unique SaaS fee model and hands-off software management, differentiating it from other sales tax compliance solutions. "We offer end-to-end automation, letting businesses concentrate on serving their customers. Legacy vendors have stopped innovating, and many competitors focus only on SaaS or e-commerce, missing key aspects of seamless integration."
Looking ahead, Kintsugi aims to enhance its platform and team further, making sales tax compliance effortless for businesses worldwide.
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