Tax Preparation

April raises $10 million for its tax preparation infrastructure platform

Over 167 million tax returns were filed for the 2020 tax year; 151M were submitted electronically. While the technology has slowly made its way into tax preparation, it has largely been done in closed ecosystems. Other challenges include major tax preparation software providers H&R Block and TurboTax, which recently opted to exit the IRS’s Free File Program. Trying to capitalize on this missed opportunity is April, a tax preparation infrastructure solution that works with banks and fintech companies to provide them with the backbone to handle their users’ tax needs, as well as directly with consumers through their existing financial relationships (banks, apps, etc.). Leveraging machine learning, open banking, and APIs, April’s platform integrates with financial institutions to automate tax preparation — no more digging around for bank statements and other documents. The company has successfully translated tax legislation into a digital format that offers APIs that will fuel a new wave of innovation for developers and financial service providers, making tax-as-a-service a new offering that will ultimately become a more curated, personalized one , efficient and streamlined experience for filers.

AlleyWatch met with April Cofounder Ben Borodach to learn more about how April intends to change the tax solution paradigm, the company’s strategic plans, the recent funding round and much, much more…

Who were your investors and how much did you raise?

In our $10 million seed round, we raised capital from notable technology investors and financial leaders, including Team8, NYCA Partners, Bolt by QED, Treasury, Euclidian Capital, iAngels and founders of fintech unicorns: Jeff Cruttenden of acorns, Eli Broverman the improvement, Shai Wininger of lemonade and Lowell Putnam by Quovo (plaid).

Tell us about the product or service April offers.

We’ve set a new standard for tax solutions: we’re helping Americans take control of their taxes using the latest natural language processing and human-assisted AI. April’s personalized engine offers taxpayers a fast, smooth, and affordable tax experience that aims to simplify the cumbersome tax process.

What inspired the beginning of April?

It doesn’t have to look far to see that the tax system isn’t working for most Americans, and we think now is the perfect time to do something about it. Taxes – both federal and state – remain key issues affecting us all, and major developments in machine learning, open banking and APIs have finally made it possible to build a new paradigm.

How is April different?

Unlike traditional tax providers, we work directly with banks and financial institutions to break down the traditional silos between tax and financial planning.

We are also democratizing access to tax legislation through modern APIs that allow developers to explore and build new solutions, ultimately giving taxpayers more transparency and autonomy in the process.

What market is April targeting and how big is it?

Approximately 169 million Americans file taxes each year and 95% of US households are served by the banking sector. Additionally, more and more Americans are looking to digital and self-service options. We see a large and growing market for our platform and capabilities.

What is your business model?

Our model is to offer Tax-as-a-Service to the banks and other financial partners who can integrate our offering and make it available to their members and customers.

What are your post-COVID office plans?

We already have offices in New York, Tel Aviv and Tulsa. Employees can use the office flexibly as needed. As we are a distributed team, much of our work is done remotely. On average, employees come into the office one to two days a week, COVID restrictions or disruptions permitting.

How was the financing process?

We founded the company with the venture fund Team8. We then brought on board strong fintech investors like NYCA, QED and Treasury and founders of fintech unicorns like Acorns, Lemonade, Betterment and Quovo (Plaid).

What were the biggest challenges you faced in raising capital?

We had the advantage of working with a strong venture firm (Team8) right from the start. The hardest part was having a good problem as we had way more interest in the company than we had room in the group.

What factors related to your business prompted your investors to write the check?

Today there are a handful of companies that offer personal tax software solutions. Their software is closed and proprietary and only they can use it. Because this software has historically been expensive and difficult to create, it has limited the number of options available to consumers. April is disruptive because we are building a modern tax suite that enables any FinTech company or developer to create tax-related products and services. This will give the consumer and the market many more choices than they have today.

Today there are a handful of companies that offer personal tax software solutions. Their software is closed and proprietary and only they can use it. Because this software has historically been expensive and difficult to create, it has limited the number of options available to consumers. April is disruptive because we are building a modern tax suite that enables any FinTech company or developer to create tax-related products and services. This will give the consumer and the market many more choices than they have today.

What milestones do you want to achieve in the next six months?

We have several big announcements in the works, including the launch of a new US office and several partnerships with major financial institutions.

What advice do you have for New York companies that don’t have a fresh injection of capital in the bank?

The good news is that there is more venture capital available than ever before and many investors are not limited to investing in just one specific region, giving you as a founder many options. The key is to come up with a clearly articulated opportunity in a large market and master the metrics you use to de-risk your idea. Troubleshooting and brainstorming in these areas can help uncover new funding opportunities.

Where do you see the company now in the near future?

We are launching our first product in the first half of 2022 for select clients of leading fintech partners, in time to file their taxes for this season.

What’s your favorite outdoor restaurant in NYC?

A takeaway slice of pizza from Joe.

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