[The Turning Point] Braving rejections from VCs, how this engineer built tax filing startup ClearTax
The Turning Point is a series of short articles that focusses on the moment when an entrepreneur hit upon their winning idea. Today, we look at tax filing and investment platform ClearTax.
Today, ClearTax might be one of the leading players in the tax filing and investment segment, but how did Founder Archit Gupta, a software engineer, get started on the idea?
It all began in the sweltering Delhi summer of 2010. Archit was then an engineer at a California-based IT company, Data Domain, and was down to visit his parents. One day, he and his father sat around talking about the complexities of the government’s recently introduced online tax-filing portal.
“I learned from my father that not only an average taxpayer but also professionals like him struggled to master the portal. The government platform had an Excel-based tool. You had to download the sheet and be very sure of what you were filling. Then you had to generate an XML file, which had to be uploaded manually. It was a big problem and needed a solution,” he says.
However, Archit went back to his job and spent the next few months trying to gauge the feasibility of building a self-serving platform. Initial research showed that not many Indians filed tax returns, largely because of ignorance about the ramifications of failing to do so and the tedious process involved.
Highlighting this problem were the numbers from the Income Tax Department, which estimated only 4.36 crore tax assesses in FY12; this was three to four percent of India’s total population. He was convinced of the opportunity.
With help from a bunch of interns, he had the first version of ClearTax ready sometime in 2011. He launched ClearTax the same year along with his father, Raja Ram Gupta.
“Later I met Srivatsan Chari and Ankit Solanki at a hackathon, which I hosted for Paytm in September 2011. After meeting them, I wanted all three of us to work together. So I asked them both to join the startup in early 2013,” Archit explains.
Everything changed when, in 2014, Silicon Valley-based startup accelerator Y Combinator selected ClearTax to be part of its accelerator programme. Since then, there has been no looking back.
“It was a turning point in the journey of ClearTax, and by far, it was the most interesting and exciting experience.”
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“The product was complete, and I launched ClearTax in 2011. It was just 11 days before the deadline ended, that year for tax filing. And in those 11 days, ClearTax had almost 1,000 people using the platform. I offered to help those who were in need of assistance for a small fee ,” Archit says.
The company also offered corporates, SMEs, and chartered accountancy firms a paid service for filing corporate tax returns.
But the ride to success was not as easy as it may sound. Archit says that it was a long and lonely journey before recognition came his way.
“While the start gave me the confidence to move ahead, venture capitalists did not see value in an Indian product that was not meant for the US clients. They were not interested in any such platform which was just for India. There were a lot of difficult nights and weekends. The question was how do you execute a larger vision without money. My friends in the Valley kept alerting me about the opportunities there, which did not help the situation.”
However, as an entrepreneur, Archit learned that it is important to ignore all the noise around, especially when the business is not doing well. Archit and his family found it hard to make their relatives understand that he was building a business.
Riding the wave
Today, ClearTax is claimed to be used by over five million Indian taxpayers to e-file their tax returns.
“The ClearTax GST Software, India’s first ready-to-use GST-compliant billing and filing solution, is currently used by six lakh businesses, 60,000 CAs, and tax professionals, and over 1,000 large enterprises. ClearTax not only offers services but also educates its customers. The company employs tools such as AI-aided investment planner which will help guide them to a fiscally secure future,” says the founder.
However, currently, the company’s focus is on building mobile-focused products for simplifying the financial lives of businesses and individuals.
(Edited by Suman Singh)
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