Tiger Global may lead a $100 million funding round at ClearTax

ClearTax, a startup that assists individuals and businesses in filing tax returns online, is in talks with New York-based Tiger Global to lead a $100 million funding round, three people with direct knowledge of the development stated. The capital raising is expected to value the 10-year-old company at $750-$850 million, they said.

“Tiger Global is likely to lead the round by bringing in around $60 million, with the rest being pumped in by existing investors,” said a person with direct knowledge of the deal.

In 2019, the company acquired $50 million (Rs 400 crore) in a Series B funding round led by Composite Capital. Its other investors include Elevation Capital, Sequoia Capital India, Paypal co-founder Peter Thiel’s Founders Fund, and Naval Ravikant’s AngelList.

The Bengaluru-based company plans to use the funds to fuel growth and expand its product basket, said one of the people.

Founded in 2011 by Archit Gupta, Srivatsan Chari, and Ankit Solanki, ClearTax was the first India-focused company to be funded by seed money startup accelerator Y Combinator.

The company provides solutions, including GST and e-way bill software, as well as business incorporation and compliance services for enterprises. It also launched a platform for tax savings and mutual fund investment in January 2020.

In an interview with Economic Times in December last year, Gupta said the company had intentions to enter into newer areas such as stockbroking and wealth management services, eyeing a share of India’s fast-growing retail investment market that has witnessed a huge inflow of first-time traders amid the Covid-19 pandemic. “We have plans to pump Rs 100 crore into developing and promoting our new app — Black, which will double up as both tax management and investment platform for retail customers,” Gupta had stated.

A spokesperson for Tiger Global declined to comment.

ClearTax competes with companies like Cygnet, Tally, and CompuTax in the GST filing and tax compliance space. It will also take on fintech companies such as Zerodha, Upstox, ETMoney, and Paytm Money as well as incumbents such as Motilal Oswal and ICICI Securities in the mutual fund and wealth management segment.

The primary force that drives revenue for ClearTax is its B2B GST filing platform which overlooks annual tax filings worth $250 billion for corporate clients.

Tiger Global has increased the pace of investing in the Indian market, and ClearTax is its sixth deal so far this year, including Infra.Market, Unacademy, Innovaccer, Zomato and Cred. The New York-based investment manager is raising its thirteenth global fund with a corpus of $3.75 billion. It plans to invest in Indian startups out of this global pool of capital.