Summary:
Numeral raised $35M in Series B funding, valuing the AI sales tax startup at $350 million just two years after founding.
Founded by ex-Airbnb product manager Sam Ross, who was inspired by his own e-commerce struggles with complex sales tax compliance after a Supreme Court ruling expanded tax obligations.
The startup uses AI to automate sales tax management, handling over 11,000 jurisdictions, reducing errors, and acting like a human accountant for tasks like filing and payments.
Revenue has grown 3.5 times in the past year, with over 2,000 clients including EightSleep and Graza Olive Oil, and it differentiates with international tax services in markets like Africa.
Competitors include Anrok, Zamp, and Avalara, but Numeral's AI-driven approach and global focus give it a unique edge in the growing market.
Numeral's Journey: From Global Travels to AI-Powered Sales Tax Automation
Sam Ross, co-founder and CEO of Numeral, conceived the idea for his sales tax compliance startup while exploring the world after his tenure as a product manager at Airbnb. In early 2018, remote work wasn't as prevalent as today, but Ross capitalized on the direct-to-consumer trend by running self-funded e-commerce ventures, including an online jewelry store and a vitamin DTC site, all from the road.
Despite the freedom, Ross was constantly frustrated by the complex and bureaucratic process of handling sales tax. Before 2018, e-commerce and SaaS companies only paid sales tax in states with a physical presence, but a Supreme Court ruling that year mandated tax collection in all customer jurisdictions. This sudden shift meant dealing with over 40 states, turning a manageable task into a painful ordeal.
Encouraged by Gustaf Alstromer, his former boss at Airbnb and a partner at Y Combinator, Ross applied to the accelerator in 2023 with a vision to automate every facet of sales tax management. Fast forward to today, Numeral has raised $35 million in a Series B funding round, valuing the two-year-old company at $350 million. This follows an $18 million Series A just six months prior, with investments led by Mayfield and participation from Benchmark, Uncork Capital, Y Combinator, and Mantis (co-founded by The Chainsmokers).
While numerous software solutions exist for sales tax, Ross believes AI can eliminate complexities and emulate human tax accountants. Numeral's AI handles tracking tax law changes across over 11,000 jurisdictions, managing tax-related mail, and filing and paying taxes on behalf of clients. Since most tax rules are unambiguous, the risk of AI hallucinations is low, though some laws are quirky—like in New York, where a whole bagel is tax-exempt, but a cut one is taxable as 'ready to eat'.
Numeral's AI is trained on thousands of such regulations. Over the past year, the startup has grown revenue by 3.5 times and now serves over 2,000 software and e-commerce clients, including EightSleep, Graza Olive Oil, and Manus.
Although sales tax management might seem niche, it's a competitive space with players like Anrok, Zamp, and the 26-year-old incumbent Avalara, which is planning to go public soon. Ross highlights that Numeral's international offerings set it apart, filing taxes in markets like Tanzania and Kenya, where businesses would typically rely on CPA firms.
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