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Qualtrics, Ryan Smith

This Utah Startup Just Raised $100 Million To Solve Cryptocurrency’s Looming Tax Problem

This Utah startup just raised $100 million to solve cryptocurrency’s looming tax problem:

3/5/2021 5:55:00 AM

This Utah startup just raised $100 million to solve cryptocurrency’s looming tax problem:

TaxBit’s $100 million Series A from Paradigm and Tiger Global is Utah’s biggest ever as the startup is looking to build the ERP of cryptocurrency.

TaxBitWith bitcoin’s market capitalization approaching $1 trillion, and hundreds of billions more in value in a host of other coins and projects, boring old taxes are becoming a big headache—not just for consumers, but also the exchanges, businesses dabbling in the sector and governments getting involved.

While others speculate on the coins themselves in the new gold rush, entrepreneur Austin Woodward’s happy to provide the picks and shovels. His startup, TaxBit, automates all those gains and losses for the customers of exchanges and power users alike. And with Utah’s largest-ever Series A funding round in the bag, he’s on track to build a buzzy business in the process.

“The entire existence of this asset class that can be so disruptive to our financial sector is at risk because of tax and accounting compliance at scale,” Woodward says. “There’s no NetSuite, Oracle or SAP of cryptocurrency.”Founded in 2018, TaxBit’s raised $100 million in its Series A financing, led by investment firms Paradigm and Tiger Global. PayPal Ventures, Winklevoss Capital, the investment firm of the headtopics.com

billionaire Winklevoss twins, Coinbase Ventures and others, including Bill Ackman and Qualtrics cofounder Ryan Smith, joined the round, which takes the Utah-based startup’s total funding raised to more than $107 million.Initially a consumer-facing product, today TaxBit offers its software to a mix of individual practitioners and, more lucratively for the startup, the businesses that help them invest and trade: crypto exchanges, wallet providers, lending platforms and the like. TaxBit’s software is white-labeled, meaning that users of those tools will sometimes know they’re working in the startup’s software, sometimes not, often accessing it through the “tax center” sections or pages of the companies’ websites. TaxBit has processed more than one million tax forms to date, the company says.

TaxBit got its start as Woodward and his brother, Justin, began to explore the emerging crypto category while in their previous jobs. Justin was working in a federal judicial clerkship while attending law school at the University of Chicago; Austin was spending nights researching and dabbling in crypto assets while an early employee at Qualtrics, the customer experience company that is one of Utah’s recent tech breakouts. Austin Woodward says one formative moment was when he was responsible for Qualtrics’ missing payroll in Australia because he sent a wire ten minutes late that took 48 hours to clear—a problem, he believed, that crypto could solve, alongside others like transaction fees, cross-border payments and the ability for nonaccredited investors to buy small pieces of assets like real estate through tokens.

TaxBit cofounders Justin Woodward, Brandon Woodward and CEO Austin Woodward launched their startup from Justin and Austin's dad's basement.TaxBit Read more: Forbes »

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