Column Tax Raises $5.1M Seed Round for Mobile Tax Prep

Column Tax Secures $5.1 Million in Seed Funding

Mobile income tax software company, Column Tax, has announced the successful completion of a $5.1 million seed funding round. This investment will facilitate the launch of their initial commercial product, designed to provide users with accelerated access to their tax refunds.

Investment Details

Bain Capital Ventures spearheaded the seed round, with participation from South Park Commons, Core Innovation Capital, and Operator Partners. Notable angel investors also contributed, including Eric Wu, the founder of Opendoor, and Adam Nash, formerly CEO of Wealthfront.

Tax Refund Unlock: Early Access for Klover Users

Column Tax’s first offering, “Tax Refund Unlock,” is now available to the 2 million users of the cash advance application, Klover. According to Klover CEO Brian Mandelbaum, the target demographic consists of Millennials and Generation Z individuals.

This early access to tax refunds functions as an interest-free advance, potentially mitigating the need for users to resort to high-interest loans or accumulate credit card debt, Mandelbaum explained.

Powered by Atomic’s Payroll Connectivity

The product leverages the APIs provided by Atomic, a payroll connectivity provider. This integration allows users to receive their tax refund amounts directly within their regular paychecks.

Upcoming Tax Filing Product

Column Tax is also preparing to launch “Tax Filing,” its comprehensive tax preparation product, in February 2022, coinciding with the start of the upcoming tax season. The company communicated this timeline to TechCrunch.

The funds from this seed round will be utilized to expand the company’s team from its current eight employees to over 20 by the end of the following year. This growth will support the development and expansion of both product offerings, as stated by CEO and founder Gavin Nachbar.

Differentiating from Traditional Tax Software

Column Tax distinguishes itself from established players like TurboTax and H&R Block through its mobile-first approach and integration directly into users’ bank accounts. This allows for continuous, year-round tax management, which the company believes will significantly reduce the time users spend on tax preparation.

Year-Round Tax Management

“Affluent individuals benefit from the guidance of CPAs and accountants throughout the year. Our aim is to replicate this level of support, embedding it within software to make it accessible to everyone,” Nachbar stated.

The Rise of Payroll Data and Fintech Opportunities

Nachbar, who previously held a leadership role in operations strategy and infrastructure at Waymo, highlighted that companies specializing in payroll data have unlocked “a new era of possibilities” for fintech companies seeking to develop solutions centered around income and payroll information.

“Prior to Atomic’s technology, understanding an individual’s tax situation mid-year required manual processes like downloading pay stubs and emailing them,” Nachbar noted.

Future Expansion Plans

Currently, Column Tax supports only federal income tax filings. However, plans are in place to incorporate state tax offerings, beginning with New York and California, Nachbar added.

Embedded Tax Solutions and Market Potential

Nachbar anticipates substantial growth in the area of embedded tax solutions integrated with other financial platforms, citing Cash App’s acquisition of Credit Karma Tax as a prime example.

“We are witnessing the emergence of a new age of embedded taxes,” Nachbar said. “The complexities of income tax calculation present a significant technical challenge. We are assembling a robust engineering team to address this challenge effectively.”