Taxdoo, the automated platform for financial compliance in e-commerce, today announced it has raised over €17 million Series A financing, led by global venture capital firm Accel, with participation from Visionaries Club, 20VC and existing investor HTGF. The funding will support Taxdoo’s rapid growth through international expansion, increased hiring, R&D, sales and customer support.
As consumers continue to move online, e-commerce in Europe is forecast to exceed €700 billion in 2020 with cross-border transactions now representing approximately 25% of the total and rising. In response, hundreds of thousands of businesses are turning to Amazon, eBay, Shopify and a wide array of other platforms to sell internationally. However, as they do, they are facing increasing complexity around VAT, accounting and other compliance requirements, with data siloed across multiple online systems.
With cross-border e-commerce posing challenges to traditional domestic taxation, governments are focusing on indirect taxes such as VAT as a key source of income. However, fraud and inadequate tax collection is expected to result in €164 billion of VAT revenue leakage across Europe in 2020, which is driving governments to increase legislation for e-commerce. Ninety percent of the resulting burden for online businesses consists of collecting, preparing and reviewing compliance-related transaction data.
Taxdoo’s founders, Matthias Allmendinger, Roger Gothmann and Christian Königsheim saw the potential to solve this burden with automation during their PhDs in finance and economics at the University of Hamburg. Gothmann is a renowned international VAT expert following his 10-year tenure at the German ministry of finance and brought this expertise into Taxdoo. Together, the founders developed the idea to connect compliance with an API-driven platform in the e-commerce ecosystem.
Taxdoo’s platform automates transaction-level data ingestion, tax calculation and filings across Europe, as well as the integration of financial and accounting information. Customers can also collaborate with their tax advisors through the platform and reduce other compliance burdens, including Intrastat filings. What used to take days of effort across error-prone spreadsheets and email is now automated and auditable.
The company has grown quickly and profitably. It now empowers more than 1,000 merchants from the DACH region to sell compliantly across the EU and is scaling up aggressively to meet demand. Taxdoo will expand in the coming months to support all global sellers active in the EU market, as well as introducing new accounting and compliance solutions within its SaaS platform. Additionally, Taxdoo intends to triple headcount to more than 150 by the end of 2021, with hiring predominantly for Hamburg-based engineering, sales and marketing positions.
“Our goal is to contribute to seamless cross-border commerce in Europe and beyond, where companies are able to focus on their core business, not on bureaucracy,” says Christian Königsheim, co-founder of Taxdoo. “With Taxdoo, e-commerce sellers and other digital businesses significantly reduce their time and costs to handle all tax-compliant processes and achieve greater visibility of their data.”
“With a booming e-commerce landscape and companies of all sizes looking to sell their products and services internationally, we see an acute need for integrated financial and tax compliance,” says Harry Nelis, partner at Accel. “Taxdoo’s founders bring together unique experience at the intersection of tax, finance and software and we are excited to work with them to build Taxdoo into a category defining company.”