For tax year 2020, there were 167M+ tax returns filed; 151M were filed electronically. While technology has slowly made its way into tax preparation, it’s been done largely in closed ecosystems. Further challenges include major tax preparation software providers H&R Block and TurboTax opting to recently exit the IRS’ Free File Program. Looking to capture this lost 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 via 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 shuffling around for bank statements and other documents. The company has successfully translated the tax code into a digital format that offers APIs that will fuel a new wave of innovation for developers and financial service providers by making tax-as-a-service a new offering, which ultimately leads to a more curated, personalized efficient, and optimized experience for filers.
AlleyWatch caught up with April Cofounder Ben Borodach to learn more about how April is intent on changing the tax solution paradigm, the company’s strategic plans, recent round of funding, and much, much more…
Who were your investors and how much did you raise?
In our seed round of $10M, we raised capital from notable tech investors and financial leaders, including Team8, NYCA Partners, Bolt by QED, Treasury, Euclidean Capital, iAngels and founders of fintech unicorns: Jeff Cruttenden of Acorns, Eli Broverman of Betterment, Shai Wininger of Lemonade, and Lowell Putnam of Quovo (Plaid).
Tell us about the product or service that April offers.
We have created a new standard for tax solutions: helping Americans take control of their taxes by utilizing the latest in natural language processing and human-assisted AI. April’s personalized engine provides taxpayers with a fast, frictionless, and affordable tax experience aimed at easing the cumbersome tax process.
What inspired the start of April?
You don’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 forefront issues affecting all of us and key developments in machine learning, open banking, and APIs have finally made it possible to build a new paradigm.
How is April different?
Unlike legacy tax providers, we partner directly with banks and financial institutions to do away with the silos traditionally existing between tax and financial planning.
We are also democratizing access to the tax code through modern APIs that enable developers to tap into and develop new solutions, ultimately allowing for taxpayers to have greater transparency and autonomy in the process.
What market does April target and how big is it?
Approximately 169M Americans file taxes every year and 95% of US households are served by the banking sector. Further, more Americans are searching for digital and self-serve options. We see a large and growing market for our platform and capability.
What’s your business model?
Our model is to offer the 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 have flexibility to use the office as needed. Since we are a distributed team, much of our work is done remotely. On average, employees are coming to the office one to two days a week, COVID restrictions or interruptions permitting.
What was the funding process like?
We incubated the company with venture fund Team8. We then brought on strong FinTech investors such as NYCA, QED, and Treasury and founders of FinTech unicorns such as Acorns, Lemonade, Betterment, and Quovo (Plaid).
What are the biggest challenges that you faced while raising capital?
We had an advantage in that we partnered with a strong venture firm (Team8) from the beginning. The hardest part was a good problem to have in that we had much more interest in the company than we had space in the round.
What factors about your business led 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 are able to leverage it. Because this software has historically been expensive and difficult to build it has limited the number of options available for consumers. April is disruptive because we are building a modern tax suite that enables any FinTech company or developer to build tax-related products and services. This will give the consumer and the market many more options 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 are able to leverage it. Because this software has historically been expensive and difficult to build it has limited the number of options available for consumers. April is disruptive because we are building a modern tax suite that enables any FinTech company or developer to build tax-related products and services. This will give the consumer and the market many more options than they have today.
What are the milestones you plan to achieve in the next six months?
We have several big announcements in the works, including the establishment of a new US office and several partnerships with major financial institutions.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
The good news is that there is more venture money available than ever before and many investors are not constraining themselves to investing only in a specific geography, so as a founder you have many options. The key is to come with a clearly articulated opportunity, in a large market and have a command of the metrics you are using to de-risk your idea. Troubleshooting and brainstorming in these areas can help unlock new funding opportunities.
Where do you see the company going now over the near term?
We are rolling out our first product during the first half of 2022 to select customers of leading Fintech partners, in time to file their taxes for this season.
What’s your favorite outdoor dining restaurant in NYC?
A slice of Joe’s Pizza to-go.
