Boast.ai, a startup developing software that automates the process of claiming R&D tax credits, today announced it has raised $ 23 million in funding. The company said it would invest the funds in developing its AI-based platform to better serve its customers, launch new products and expand into new markets.
Each year, the federal governments of the United States and Canada provide more than $ 15 billion in innovation incentives to private companies. In fact, it is valued that nearly a third of US patents are based directly on research funded by the US government. But filling out applications to receive that funding is often a tedious process – and yet another hurdle for companies pressed by the pandemic as venture capitalists retreat from start-up investments.
Boast.ai, which has offices in Vancouver, Toronto and Calgary, in addition to its headquarters in San Francisco, was co-founded in 2011 by Alex Popa and Lloyd Lobo. Popa previously managed R&D tax practices for large accounting firms, while Lobo previously managed revenue and growth for a number of venture capital-backed tech startups.
“To get a government R&D tax credit, a company must incur one year of R&D and development expenses, compile all the information to file with its taxes, and then wait for government processing times,” Lobo said. to VentureBeat by email. “Time is an expensive resource for startups and small businesses, especially during a pandemic, when there is a lot of uncertainty and critical needs to manage. “
Boast.ai aims to automate the government grant application process with a machine learning-based tax credit platform. The company’s software and accounting teams collect data from existing technical and financial systems to help identify, categorize and time eligible projects, with the goal of making larger claims, reducing risk and devote less time to teams. Some of the data sources that Boast.ai relies on include payroll, development platforms like GitHub and Jira, and accounting, which its systems leverage to produce time tracking documents and tax forms, as well as audit evidence, timelines and balance sheets.
“By using proprietary algorithms, we make sense of unstructured data,” Lobo said. “Boast.ai makes it possible to identify, categorize and track projects and costs eligible for the R&D tax credit over time, and automate the application process.
Boast.ai specifically targets three types of tax credits: the U.S. research and experimentation tax credit (R&D tax credit), Canadian government SR&ED (SR&ED) tax credits, and Canadian government tax credits. tax for interactive digital media (IDMTC). The R&D tax credit, which became permanent in 2015, is a general tax credit for companies that incur R&D costs related to salaries, subcontractor-related expenses and materials in the United States. R&D expenditure for the creation or improvement of products, processes, principles, methodologies and materials existing in Canada. As for the IDMTC, it offers a refundable tax credit of 17.5% on eligible salaries and wages for Canadian employees involved in the production of video games, educational software, entertainment software and simulators.
Boast.ai claims to have helped secure over $ 200 million in R&D funding for over 1,000 clients to date, including Lendesk, Oral4D and Policy Works. The startup also claims to have doubled its year-over-year growth since its launch, with annual recurring revenues in the “eight digits” and a gross margin of over 80%.
“The pandemic has accelerated the need for capital with millions of struggling entrepreneurs, but accessing government incentives remains a laborious process,” Popa said. “We are democratizing access to capital so that entrepreneurs can grow their businesses without having to deal with bureaucracy. “
Radian Capital led the Series A announced today. Boast.ai currently has 35 employees.
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