Software/ platforms

Anrok Secures $4.3M, Launches Modern Sales Tax Solution

Index Ventures and Sequoia support launch of tax compliance platform for internet subscription businesses following landmark Supreme Court decision

Anrok, the sales tax solution built specifically for software-as-a-service (SaaS) businesses, today announced the launch of its new platform, along with $4.3M in seed funding co-led by Index Ventures and Sequoia Capital. The platform, which allows internet businesses to determine, calculate, and manage ever-shifting sales tax obligations, arrives at a time when internet SaaS businesses are facing a major shift in the taxability of software.

In 2018, a Supreme Court decision in South Dakota v. Wayfair paved the way for states to collect billions of dollars in tax revenue from purchases made online. Of the 45 states that levy sales tax, all have since introduced revenue or transaction thresholds that, once crossed, mandate companies to collect and remit sales tax. The decision has created a major fiscal opportunity for states looking to recover from losses incurred due to the COVID-19 pandemic, which has shuttered retail businesses for much of the past year — but for companies selling purely digital products and services, the development has created a new compliance burden.

With Anrok, internet SaaS businesses of all sizes can now access a sales tax platform made to fit their hybrid enterprise and self-serve revenue models. Moreover, with cloud software companies positioned to grow 47% in the next two years, the launch of Anrok means these businesses can monitor and fulfill their sales tax obligations, manage compliance with confidence, and power the economy while driving their own business growth.

“Governments are finally waking up to the reality that much of the economy has moved online,” says Michelle Valentine, CEO and co-founder of Anrok. “However, introducing the existing system of sales tax to digital products and services is like trying to make a round peg fit in a square hole. For software companies, knowing where your customers are and having to calculate the appropriate tax amount in real time is far from straightforward. That’s why we’re excited to deliver Anrok to customers to help them navigate this new environment and accurately calculate tax for ever-changing subscription invoices.”

Anrok plugs into a company’s billing and payment systems, incorporating each state’s unique nexus thresholds and taxability rules in real time, and returning the relevant tax rate of each transaction. Transactions are then stored and automatically organized into returns for filing – an obligation which has increased from virtually never, to what is now a monthly requirement in many states. Anrok’s end-to-end solution helps fast-growing SaaS companies grow across boundaries and ensure compliance at every level, all without the need for an in-house tax expert.

“We know from the experiences of our portfolio companies that getting sales tax right isn’t something any founder aspires to spend time on, and yet consequences are dire for those that ignore,” says Mark Goldberg, partner at Index Ventures. “We’re excited to not only support Anrok on their journey to help SaaS businesses ensure tax compliance, but to keep a rockstar alumni in the Index family and to co-lead with Bryan Schreier and the team at Sequoia.”

While tax automation already exists for ecommerce and retail, current solutions take an isolated approach to transactions that isn’t an ideal fit for constantly evolving internet subscription models. Anrok, a San Francisco-based company, is approaching this problem from a digital-first perspective, providing the booming SaaS market with the solution it needs to thrive in a rapidly changing world.

“Anrok provides SaaS companies with a modern tax solution built for the demands of their business models,” said Bryan Schreier, partner at Sequoia. “Michelle and team are empowering internet businesses to sell and hire across boundaries, and we’re thrilled to join them on this journey.”

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