Fonoa Raises $20.5M to Simplify Global Tax Compliance

Navigating Global Tax Complexities for Digital Businesses

The proliferation of cross-border transactions presents numerous tax pain points for companies selling goods, content, or services internationally. As digital-first businesses expand their reach, effectively managing global tax and compliance becomes increasingly critical.

Introducing Fonoa: Automated Tax Solutions

Fonoa, a company headquartered in Dublin, Ireland, offers a solution to these challenges. Founded by former Uber employees – Davor Tremac, Filip Sturman, and Ivan Ivankovic – the startup provides APIs designed to help digital companies accurately determine and calculate the taxes due on their online sales.

Fonoa supports tax compliance for companies including Lime, Uber, Teachable, and Zoom. The company recently secured $20.5 million in a Series A funding round, reflecting the growing demand for online tax solutions, particularly in international markets.

Key Industries Served and Rapid Growth

Fonoa’s customer base is primarily comprised of businesses in the ride-hailing, mobility, food delivery, SaaS, and e-commerce sectors. Subscription-based businesses also represent a significant portion of their clientele.

According to CEO Tremac, Fonoa’s APIs integrate seamlessly with existing customer data, eliminating the need for manual tax calculations. The company currently processes over 300 million tax transactions annually, driven by increasing demand for its automated services.

As a B2B SaaS provider, Fonoa boasts “very healthy margins” and has experienced a remarkable 7x revenue increase since December 2020.

The Evolving Landscape of Global Taxation

Tremac emphasizes the increasingly global nature of digital commerce. “Country borders are no longer a limiting factor, and technology drives global trade at an ever-increasing speed,” he stated. This, coupled with heightened regulatory scrutiny, necessitates a more automated and reliable approach to tax management.

Fonoa provides a “plug-and-play modular platform” that verifies the tax status of both buyers and sellers. It then calculates the correct tax amount and generates locally compliant invoices following each transaction.

The platform also facilitates automatic, real-time reporting of transactions to government authorities, as required.

Accelerated Growth Driven by the Pandemic

The COVID-19 pandemic significantly accelerated Fonoa’s growth by rapidly expanding the scope of online commerce. The shift to online transactions created a greater need for automated tax solutions.

“More sales happening online translates directly into more work for us, as each online transaction requires a tax component,” Tremac explained.

Series A Funding and Key Investors

OMERS Ventures led Fonoa’s Series A financing round, with participation from Index Ventures, FJ Labs, and Moving Capital. Index Ventures previously led a $4.5 million seed round in November 2020.

Notable investors also include Gautam Gupta (former COO/CFO of Opendoor and Uber), Kevin Hartz (Eventbrite founder), Prabir Adarkar (DoorDash CFO), Carlos Gonzalez-Cadenas (former COO of GoCardless), and Allison Barr Allen (Fast COO).

Leveraging Firsthand Experience

The founders, drawing on their experiences at Uber, recognized the difficulties inherent in accurately calculating and reporting taxes across diverse international jurisdictions. This insight motivated them to develop technology capable of automating tax processes for the entire internet economy.

Global Expansion and Future Plans

Currently, Fonoa supports tax automation in over 100 countries and aims to expand coverage to more than 140 countries by the end of the year, utilizing the newly acquired capital.

The company intends to use the funds to bolster its hiring efforts. While based in Dublin, Fonoa operates with a remote-first approach, employing a 60-person team distributed across 15 countries.

They plan to add another 60 employees in the U.S., Europe, Asia, and Latin America, focusing on roles in engineering, product development, sales, recruiting, and operations.

Furthermore, Fonoa will invest in extending the functionality of its existing products and developing entirely new offerings.

“We are using all resources available to double down on growth as the opportunities ahead of us are massive,” Tremac stated to TechCrunch. “We will keep expanding until we cover all relevant use cases for all of our products across all geographies.”

Industry Validation and Expert Opinions

Hannah Seal, principal at Index Ventures, believes Fonoa empowers companies operating internationally by removing obstacles caused by the complexities of national tax regulations.

“This focus on enabling growth, not simply back-office automation, attracted us to Fonoa in the first place,” Seal noted. “Having run Uber in multiple markets, the team has a deep understanding of the challenges of scaling across borders and has developed products that allow companies to add and expand new geographies seamlessly.”

Jambu Palaniappan, managing partner at OMERS Ventures, described Fonoa’s product as “the best and most complete offering in the market.”

“They are focused on the full tax stack from validations to real-time reporting and have put technology rather than consulting at the core of their product,” he said. “With governments around the world more concerned than ever about compliance, now is the perfect time for Fonoa to build a globally relevant platform.”