Venture Talk #2

In this venture talk, we sat down with Daniel, CFO & Co-Founder from the Aachen born startup Taxy.io, who just raised their next VC funding round.

Niklas: First, Daniel, please introduce your venture to our readers. What is your business model and what are your USPs?

Daniel: We develop and sell automation solutions for the B2B tax and law industry that make their knowledge works faster and better. Our solutions are based on our proprietary machine learning and natural language processing technologies and therefore are the only ones that can answer complex tax questions automatically. In addition, our software provides recommendations to tax consultants proactively so they save time and cover additional issues to consult their clients which they would have overlooked without Taxy.io.

Niklas: How did the Corona crisis change your business?

Daniel: The crisis hit us in three ways: Firstly, we became a complete remote-company within one day. This was no issue for our IT infrastructure but had implications on the way we communicate, maintain and develop the team spirit - especially for new hires - and have fun at work. 

Secondly, a few sales processes with large clients were paused in Q2/20 and Q3/20 and are continued now. As all of our existing clients stayed loyal to us we could go on with our growth as planned and face many opportunities now for 2021. We expect to have much more virtual sales processes and less business travel in the future which reduces our customer acquisition costs. Moreover, the awareness for “working from home” compatible digital solutions to decrease costs has risen sharply.

Thirdly, facing the huge economic consequences of the fight against Covid-19 and given our quite stable position, we knew we had to do something to help companies getting through the crisis. Therefore we developed a Corona Helping Tool that maps all relevant governmental financial and taxation-related helping programs for SMEs in one simple tool that saves days of research. We developed the first prototype within 36 hours after the start of lock-down in March being the first company in Germany offering something like that and we have updated it continuously since then. Hereby we have cooperated with the winner team of the “Bundesregierungs-Hackathon” wir-bleiben-liquide - a group of highly motivated volunteers. The free Taxy.io version of this tool was used by more than 50.000 tax advisors and companies and improved our market position and branding within our target group. In addition, large tax firms and the market leader for tax software in Germany asked us to develop an own version for them that increased the reach of those helping measures even further. Needless to say that this “fighting against the crisis” and helping others generated a positive impact on our team spirit.

Niklas: Recently, you just closed a successful VC funding round. What was your strategy for identifying relevant investors? What kind of responses did you receive?

Daniel: Fundraising is always an intensive phase for a startup, because it is about the future strategy and financing of your “baby”. Depending on the investors “on the other side of the table” and the stage of your startup, it can take two to six months for the overall process. One learning was how important it is to keep up “momentum” and a speedy process to be “in focus” of the VC and communicate clear deadlines for milestones (like issuing a term sheet). Another learning was to not start during the summer period as this just prolonged the process unnecessarily. But after a slow start it ended extremely quickly thanks to the involved investors after (net) four months of fundraising. During this time we spoke to dozens of investors. Some of them couldn’t be convinced this time or prefered to invest at a later stage and we will stay in touch with them. For others it was a perfect match. In the end our round was oversubscribed.

Niklas: How did you finally convince the lead investors TechVision Fonds and 42CAP?

Daniel: What we as founders, our colleagues and our investors love about Taxy.io is that we address a huge problem (incomprehensible tax regulation) that everybody knows - no matter if enterprise, SME or private person - and crack it with an exciting technological approach that will transform a whole industry. On top, since the last financing round led by TechVision Fonds we have proven that the technology works and that we can scale it into the market bringing benefit to our customers - of which many are industry leaders. Market potential and existing traction convinced not only the previous investors to invest again, but also new investors to join, namely 42CAP from Munich and a group of business angels with relevant industry expertise. 42CAP stuck out to us due to their profound experience with B2B SaaS business models and internationalization. The general partners, Alex and Thomas, have built and exited B2B SaaS firms themselves very successfully - so they can provide crucial feedback for each stage of our future journey. 

Niklas: What are the future plans for Taxy.io? What are your business goals for 2021?

Daniel: Our focus is on scaling our automation solutions for tax advice further within the German speaking markets and launch products that help lawyers, too. By adding the legal sphere to our existing market niche we tripple our market potential. But therefore we need to strengthen the development team, establish a proper sales team and professionalize our internal processes like HR & operations. By the end of the year, we will probably have twice as many colleagues as we have today. 2021 will be a big step towards our vision of becoming the supreme platform for digital legal intelligence.

Niklas: One last question, Daniel, would you recommend everyone at RWTH Aachen University to become a founder? 

Daniel: Well, I wouldn’t recommend everyone at RWTH Aachen to become a founder, but I would recommend everyone, who wants to become a founder, to join RWTH Aachen and reach out to RWTH Innovation! We benefited a lot in our first year while we received our EXIST startup grant from the early support from RWTH Innovation and the funding through EXIST. RWTH Innovation prepares you to take off!

Are you a founder who is planning to fundraise over the coming months? RWTH Entrepreneurship Center’s investor network comprises some of Europe’s leading venture capital firms and business angels. Our dedicated team of start-up coaches can help you leverage this network.

Get in touch with us here.