A 2018 Supreme Court ruling eliminated the requirement that an e-commerce retailer needed a physical location in a state for said state to collect sales tax on purchases made by residents. While the decision was a boon for states, it created a headache for e-commerce sellers.
Kintsugi seeks to offload and automate sales tax calculation and reporting for businesses. The San Francisco-based company’s AI technology connects to a company’s billing and payment systems and determines in which states it owes sales tax. It then saves users to the correct states. From there, the system can automatically calculate and remit what a business owes in sales tax to ensure business compliance.
Kintsugi raised a $6 million Series A round earlier this year, led by Link Ventures, which valued it at $40 million after valuation in April. The company has since reopened its Series A round, raised an additional $4 million in capital led by Airwallex, and doubled its valuation to $80 million.
Pujun Bhatnagar, co-founder and CEO of Kintsugi, said he became interested in the sales tax field while working as a senior machine learning engineer at Meta in 2018. Bhatnagar told TechCrunch that his father and grandfather worked in the tax field their entire careers. Bhatnagar found himself in 2018 wondering what he wanted to do with his life. It happened to be around the same time as the Supreme Court decision, which opened up a whole new market worth exploring, he said.
“It’s basically an amalgamation of 52 different types of small countries, which have their own laws and jurisdictions when it comes to local governments,” Bhatnagar said. “And 48 of those jurisdictions have laws related to sales tax.”
To really understand the problem, Bhatnagar said he started manually applying sales tax for e-commerce and SaaS businesses for a year and a half to really understand the issues before writing any code. He also had Kintsugi’s first employees calculate sales tax manually.
From there, they built a platform and algorithm to modernize and automate sales tax compliance. Bhatnagar said building the model in-house made its results more accurate than those of competitors who rely on large global language models. He said the company also keeps humans informed to monitor accuracy.
The company was officially founded in 2022 and launched its website in August 2023. Bhatnagar said the interest was immediate and Kintsugi was able to expand its customer base to more than 1,100 users over the past year. It generated $1 million in revenue.
Kintsugi isn’t alone in wanting to modernize the sales tax process for businesses. Competitors include Anrokwhich has raised more than $50 million in venture capital, and CereTaxwhich has raised $19 million in venture capital, in addition to many legacy companies outsourcing the process to people in countries like India. This is the same type of work that Bhatnagar’s family had been working on.
Bhatnagar believes part of the reason demand has been so high for Kintsugi is its approach to attracting customers. The company allows potential customers to sign up for free and check if they like it. If they choose to continue, they can pay $100 per tax return or create a custom plan. Bhatnagar added that some of their competitors charge high fees just for integration on their platforms.
“We’re the only company in the space that has a ‘Get Started’ button, a ‘We’ll do your sales tax analysis for free (button),’” Bhatnagar said. “And it won’t happen just once. You can create a free account and every seven minutes the report will be updated for you. And this is an added value that we want to offer free to founders, even if they decide not to pay a single cent for Kintsugi.
Kintsugi plans to use its new capital to continue developing its technology and help the company prepare to expand into Canada and Europe.
“We’re a bunch of nerds,” Bhatnagar said. “We’re not trying to sell snake oil. Connect your data, see the results.