Indian tax filing platform ClearTax on Tuesday announced raising $1.3 million in a seed round from 10 Silicon Valley investors, including big names like PayPal Co-founder Max Levchin, serial investors Scott and Cyan Banister, Dropbox Vice-President Ruchi Sanghvi and WhatsApp’s Business Head Neeraj Arora.
The funds will be deployed to scale up the product and technology team from 65 to 150, while the rest of the proceedings would go towards brand building and marketing activities. This also happens to be the first Indian investment for PayPal Co-founder Max Levchin.
So how did ClearTax manage to rope in the investors? Archit Gupta, Co-founder and CEO of ClearTax says that being a Y Combinator alumni helped to make the initial connects. But what really got them to invest was the organic growth and traction the platform achieved without any funding.
Claiming to be catering to almost three percent of the taxpayers in the country, ClearTax has close to 10 lakh users filing their taxes on the platform. The firm also has an active network of 10,000 chartered accountants and tax experts.
On the investment, Archit says,
We are fortunate today to have the best Silicon Valley investors come together to invest in us. The investors have seen startups grow at a large scale and we believe their mentorship will bolster our growth. We were also lucky since this round of funding was oversubscribed and we were able to choose the right set of mentors.
Investors Scott and Cyan Banister will assist the business in expanding into newer business areas, while helping the team get their basics right. Neeraj Arora will assist the business in building a lean team.
Apart from their B2C play, ClearTax is also a SaaS solution provider, offering ClearTDS (as a software) to almost 5,000 Indian businesses for preparing their TDS returns and quarterly withholdings.
In 2014, ClearTax processed tax return e-filings for three lakh individuals and was selected for Y Combinator’s summer batch of 2014. It claims to be the fourth Indian startup to be ever funded by Y Combinator and the first one with a focus on the Indian market.
Although financial assistance services (for startups) is growing as a market, tax filing still remains to be a niche sector. This could be owing to either the lack of domain expertise in this sector or the inability to envision disruption in this space.
However, some players like Makeyourtax.com and Taxmantra are already functioning in the space. ClearTax is dipping its hands into in B2B financial advisory through analytics along with handling the B2C side of the business. However, the firm doesn’t plan to leave its niche while continuing to disrupt the tax filing space.
The next obvious route for growth for the firm is the largely untouched tax savings market, while also introducing prediction capabilities through the analytics and data collected on its clients and customers.
Tarush is driven towards delivering unbiased and accurate reportage while engaging with as many mediums as possible to narrate a fresh perspective. Working for the past few years in the digital space with YourStory, he has covered the Indian technology ecosystem extensively, focusing on new age Fintech companies, while building strong connects within the industry.