Kintsugi Doubles Valuation to $150 Million, Partners with Vertex to Expand AI-Driven Sales Tax Compliance Globally

Silicon Valley-based startup Kintsugi, which specializes in automating sales tax compliance, has secured an $18 million funding round led by Vertex, a leading global provider of indirect tax technology solutions. This new injection of capital values Kintsugi at $150 million, nearly doubling its valuation from $80 million in just six months. The funds will be primarily used to expand its AI-driven tax compliance services, aiming to make them accessible to small and medium-sized businesses (SMBs) worldwide. Founded in 2023 by co-founder and CEO Pujun Bhatnagar, Kintsugi leverages AI to simplify and streamline sales tax compliance. The company's software integrates with various revenue-generating platforms such as Shopify, Stripe, Chargebee, and Quickbooks, providing a comprehensive view of a business’s financial transactions. This integration allows Kintsugi to instantly calculate and file sales tax, significantly reducing the time and effort required by businesses, especially SMBs. According to Bhatnagar, Kintsugi’s goal is to revolutionize sales tax compliance in a similar way Uber transformed taxi services and Stripe streamlined credit card payments. The need for tax automation solutions has surged due to the rapid expansion of e-commerce and cross-border trade, coupled with increasingly intricate tax regulations. The 2018 Supreme Court ruling, allowing states to impose sales tax on online sellers regardless of their physical presence, has further complicated matters for e-commerce businesses. While established players like Avalara have capitalized on this shift by boosting their revenues, Kintsugi has carved out a niche by offering a cost-efficient and user-friendly alternative. Bhatnagar claims that Kintsugi’s service is half the price of Avalara and can be installed and operational within seven clicks and three minutes. Users can then file their sales tax with less than three minutes of monthly input, thanks to the platform’s auto-remittance feature. Kintsugi's impressive performance includes generating $3 million in annual revenue in its first year, with ambitious targets to reach $10 million by 2025. The company boasts a customer base of 2,400, ranging from pre-revenue businesses to large enterprises, with a notably low churn rate of 0.1%. This success underscores the growing demand for efficient and accessible tax compliance tools, particularly among SMBs. Vertex, the strategic investor, sees significant synergy between its existing focus on large enterprise and complex mid-market businesses and Kintsugi’s expertise in serving SMBs. "We have relationships with some of the largest companies in the world who run marketplaces and e-commerce businesses," said Chirag Patel, Vertex’s chief strategy officer. "Kintsugi is highly specialized and can scale its business model effectively, which is difficult to do." The investment structure includes a $15 million minority stake representing 10% ownership of Kintsugi, alongside IP sharing and a commercial partnership based on a revenue-sharing model. Additionally, Vertex has committed an extra $10-$12 million to support Kintsugi’s innovative AI integrations. This collaboration is expected to enhance both companies' offerings and expand Kintsugi’s customer base across different sectors. Kintsugi’s current operations span the U.S., Canada, and Europe. With the new funding, the company plans to launch its services in South America, Africa, and the Eastern world, including India and China. SaaS companies currently make up 45% of Kintsugi’s clientele, processing 5.5 million transactions worth $7.7 billion. The partnership with Vertex, a seasoned player with a 47-year history, is anticipated to accelerate Kintsugi’s growth and diversify its customer segments. Kintsugi’s AI-driven approach not only makes tax compliance easier and faster but also more accurate and reliable. The company's 93% profit margin, according to Bhatnagar, highlights its financial robustness and sustainable business model. Employing 95 people, Kintsugi is poised to capitalize on the growing market for tax automation and compliance services, addressing the complexities and costs associated with managing sales taxes in multiple jurisdictions. Industry Evaluation: The partnership between Kintsugi and Vertex marks a significant milestone in the tax automation sector, combining the strengths of a nimble, AI-focused startup with a well-established, globally respected company. Industry insiders believe this collaboration could reshape the landscape, making high-quality tax compliance tools more accessible to SMBs while also enhancing Vertex’s offerings for larger enterprises. Kintsugi’s disruptive potential lies in its ability to offer cost-effective, fast, and accurate tax compliance solutions, potentially challenging the dominance of incumbents like Avalara. Vertex’s investment and strategic alignment suggest a strong belief in Kintsugi’s technology and market potential, paving the way for accelerated growth and innovation in a rapidly evolving field.