Blue dot raises $32M for AI that helps businesses manage their tax accounting

Artificial intelligence has become a fundamental cornerstone of how a lot of business software works, providing a useful boost in reading, understanding, and using the often-fragmented trove of data that organizations generate these days. In the latest development, an Israeli startup called Blue dot, which uses AI to help companies handle their tax accounting, is announcing $32 million in funding to continue its growth, specifically addressing the demand from companies for more user-friendly tools to help read and correctly itemize expenses for tax purposes.

“The tax sector is very complicated, and we are playing in a very large space, but it’s a huge revolution,” Blue dot’s CEO and co-founder Isaac Saft said in an interview. “Business and enterprise accounting is just not going to look the same in the future as it does today.”

The funding is being led by Ibex Investors in partnership with Lutetia Technology Partners, with past investors Lamaison Partners, Viola and Target Global also contributing. Blue dot rebranded only last week from its original name, VATBox (part of the funding will be used to help Blue dot move deeper into the U.S. market, where the concept of VAT is not quite so ubiquitous: there is no national sales tax and states determine the rates themselves).

Pitchbook notes that under its previous name, the startup last raised money in 2017, a $20 million Series B led by Viola at a $120 million post-money valuation.

While Blue dot is not disclosing valuation today, it’s likely to be significantly higher than this based on some of its engagements. In addition to customers like Amazon, tobacco giant BAT and Dell, it also has a partnership with one of the bigger names in expense accounting, SAP Concur, which uses Blue dot to power its expense data entry tool to automatically read charges and figure out how to itemize them so that employees or accountants don’t need to go through the pain of that themselves.

As Saft describes it, part of what is propelling his company’s business is the bigger trend of consumerization and the role that it has played in enterprise services: the working world has picked up a lot of technology tools, led by the smartphone, to help them organize their personal lives, and a lot of what they are being “served” through technology is increasingly personalized with lower barriers of entry, whether its on e-commerce sites, entertainment or social media. In the working world, they can often be frustrated as a result with how much work something like expenses can involve — a process that gets ever more complicated the more strict tax regimes become.

Blue dot’s approach is to essentially view the tax accounting process as something that can be improved with AI to make it easier for people to use — whether those people are workers itemizing their expenses, or accounts auditing them and running those through even bigger accounting processes. With a machine learning system that both takes into account a company’s own internal compliance and company policies, and the wider tax and regulatory framework, Blue dot helps “read” an expense and figure out how to notate it, how much tax should be accounted and where, and so on.

This is especially important as the process of entering and managing expenses gets pushed out to the people spending the money, rather than dedicated accountants handling that work on their behalf. An awareness of how modern offices are functioning today and evolving is one reason why investors were interested here.

“We believe Blue dot can change the way organizations worldwide manage accounting and its tax implications for their expenses,” Gal Gitter, a partner at Ibex, said in a statement. “There’s been a major market shift away from centralization of enterprise functions, including procurement. As that accelerates, more companies will be looking for ways to replace costly and complex manual processes with digital, automated solutions that use data and AI to essentially enable transactions to report themselves, which Blue dot delivers.”


By Ingrid Lunden

Silverfin wants to modernize accounting software with its cloud service

Meet Silverfin, a startup focused on accounting software. This isn’t about helping small startups handle accounting tasks themselves. Silverfin wants to build the cloud service for small and big accounting firms — Salesforce, but for accounting.

The startup just raised a Series B funding round led by Hg — Index Ventures led the previous Series A round. While terms of the deal are undisclosed, a source told me the round is worth approximately $30 million.

In order to improve productivity, Silverfin tries to automate the most time-consuming aspect of accounting — data collection. The company helps you connect with your clients’ accounting software directly to import their data, such as Xero, QuickBooks, Sage and SAP.

After that, Silverfin standardizes your data set and lets you add data manually so that the platform can become the main data repository.

Once your data is in the system, you need to process it. Silverfin lets you configure automated workflows and templates so that anybody in the accounting firm can enrich data and check for compliance issues. Like Salesforce and other software-as-a-service products, multiple people can communicate on the service and look at all past edits and changes.

You can then visualize financial data, generate reports and statements. It opens up new possibilities for accounting firms. They can charge advisory services thanks to analytics tools and an alert system.

The startup was founded in Ghent, Belgium, but it has now expanded to London, Amsterdam and Copenhagen. Silverfin has attracted 650 customers, including big accounting firms in Europe and North America.

By targeting the most demanding customers first, Silverfin doesn’t need to replace Xero or QuickBooks altogether. It can integrate with those existing software solutions first. There’s an opportunity to go downmarket later and convince smaller companies that don’t necessarily have a big accounting team.


By Romain Dillet

ZenBusiness raises $15m to help founders launch and grow “worry-free”

There are two sides to starting a new business. On one side, entrepreneurs need creativity, imagination — a dream, essentially — to find, build, and market a new product to users and consumers. But on the other side, they have to deal with the regulatory state and all the minutia that comes with running any business in the 21st century.

That includes such delightful topics as choosing a particular model for incorporation, ensuring that a business has the right licenses to operate, and tracking all the legal changes happening in 50 state legislatures every year. It can be inordinately complicated (and expensive!) to ensure that your business is ready and legal.

That’s where ZenBusiness comes in. The Austin-based startup wants to empower entrepreneurs to build businesses large and small by dramatically simplifying the processes required to launch a business and then grow it.

When I last chatted with the company 18 months ago, they had just raised a $4.5 million seed round and had launched its platform. Today, it’s announcing that it has raised a new $15 million series A round led by return backer Greycroft, along with returning investors Lerer Hippeau and Revolution’s Rise of the Rest fund, alongside new investors Rosecliff Venture Partners, Interlock Partners and Recruit Strategic Partners.

The company launched with a product that was essentially an automated registered agent for new entrepreneurs. Under state incorporation laws, companies must designate a so-called “registered agent” to receive official notices from regulatory agencies, and so ZenBusiness chose this strategic point for entry into the market.

When I last chatted with CEO Russ Buhrdorf, he described rolling up this market as one of the key initial targets for the company:

ZenBusiness is the brainchild of Ross Buhrdorf, who joined vacation rental marketplace HomeAway five months after its inception as founding CTO, and stayed for a decade until its acquisition by Expedia in 2015 for $3.9 billion. Buhrdorf intended to take a year off, but “didn’t quite make it a year” he told me.

He explained to me that HomeAway in many ways followed a rollup playbook, “raising $400 million and acquired 26 companies.” Bringing that rollup lens while exploring new spaces, he ran into the corporate legal services market, which offers help to companies to keep them in compliance with the law. Buhrdorf liked what he saw. “It’s different in all 50 states, highly-regulated, which is great for technology, it is overpriced, and they underserve their customers.” He says the space is “completely ripe for disruption.”

Since that time, the company has expanded its product to help entrepreneurs get beyond merely incorporating to actually building out their business by recommending services like banking, lending, tax preparation, website building, and more. The hope is to provide a “worry-free” guarantee to entrepreneurs so that they can get those early critical logistics out of the way and back to actually operating and growing their business.

“Small businesses come through this funnel, they don’t necessarily know exactly what to do. So we curate that solution, and then we provide them with the basics for them to get up and running and to be successful,” Buhrdorf said.

He explained that the company has built out some tools itself such as a simple webpage creator, but in the long run, he hopes to partner with other providers who integrate into the ZenBusiness platform. For instance, ZenBusiness has partnered with Xero as the company’s main accounting provider, while also backstopping that offering with accountants working at ZenBusiness. The idea is that the automated tooling plus a little human touch can help most owners handle the day-to-day challenges of running a business.

TeamPhoto2018

The ZenBusiness team in 2018. Photo via ZenBusiness.

Buhrdorf is particularly focused on keeping the product very self-service and automated to allow it to focus on these smaller customers. “Many of the companies that you cover that are in the enterprise space, who provide solutions for medium-sized businesses, they have to charge, they have to have sales forces, it’s very competitive there,” Buhrdorf said. “What we’re after is the segment that’s underserved, it’s the long tail of the small business segment.”

ZenBusiness has expanded its services, and it is hoping to use the fresh infusion of capital to invest in building out community features that will allow small business owners to swap tips with each other and help one another grow their businesses (presumably with some guidance from ZenBusiness community managers and experts).

The company is now 40 employees predominantly in Austin with a small office in Peru. Since we last checked in, the company has transitioned to become a public benefit corporation, which Buhrdorf said was an attempt to better align the company’s charter with its mission orientation to help small business entrepreneurs.

Update: The funding total was changed from $10m to $15m. Sorry about that.


By Danny Crichton