Stockholm-based startup Filed has announced a combined $17.2m in pre-seed and seed funding to help tax firms in the US increase their capacity through AI, with backing from Northzone and Day One Ventures among others.
Alongside the latest raise, Filed launches its first product — an AI tax tool that helps tax firms in the US process 3x more returns without hiring more people.
Accountancy can make for time-consuming work, but industry leaders are looking at ways technology can be used to speed things up. A recent study conducted by Thomson Reuters found a single accountant could save up to four hours a week through AI, using it to perform tasks such as data entry or document summarisation.
By automating the low-value work that takes nearly half of tax professionals’ time, Filed is also solving a future issue with a majority of current tax accountants in the US nearing retirement age.
The capital raised — including from investors such as J Ventures, Neo, Raine, and Greens Ventures — will be used to grow the current team of 20 by adding more engineers in Stockholm and building a sales and marketing team in the US.
Picking the US market over Europe
Filed says it decided to focus on the US market because the need for its product is much greater there. Not only are 75% of US-based accountants soon to retire, but cofounder Leroy Kerry also points out that, in comparison to Europe, about 60% of U.S. taxpayers seek professional help for tax filing, possibly due to severe penalties for mistakes.
“There is a real fear amongst US taxpayers not to mess about with their taxes,” says cofounder Leroy Kerry.
Unlike generic AI tools with no tax expertise or narrow point solutions, Filed uses a foundation model trained specifically on tax returns, combined with a coordination layer that manages tax-related tasks. This layer operates natively on top of existing software.
This means that tax firms don’t need to replace their current software, they say. The AI tool can also, through customisation, mirror existing workflows and conventions, as well as firm-specific practices. According to Kerry, by gaining access to this historical data, Filed enables the AI to make decisions based on how the firm has conducted its work previously.
“Every firm has its own way of working, storing documents, and assessing risk for a particular customer. So all of these things are stored and transmitted when a new employee joins. They teach their new employees how their firm works — in the same way, they can teach the AI,” Kerry says.
From ecommerce to taxation
Both Kerry and his cofounder Atul Ramachadran have previous startup experience, Kerry from Swedish fintech startup Juni, and Ramachadran as engineering leader at PayPal. This is not their first startup together. A year ago, the two founders founded the AI startup Magic that helped ecommerce companies handle returns at the Antler accelerator.
“Our previous startups didn’t go that well. We realised we should have a more structured approach. So we applied to the Neo accelerator and went to the US,” Kerry says.
That is when they came up with Filed.
Getting the advice not to rush into another AI solution but instead to get obsessed with the customer and their problems, Ramachandran and Kerry ended up interning at a couple of tax accountants in Colorado who were open to showing them the workings of their offices.
With the two founders having been based in Stockholm for six and two years respectively, they have decided to keep one headquarters in Stockholm to tap into engineering talent, and another in New York, from where they will grow the sales and marketing team.
According to the company, early adopters have slashed review cycles by 30–50%. It already has some large firms as customers, such as JCG Tax, Smith CPA, and KBS Tax.
One of its investors is Northzone partner Jessica Schultz. Speaking to Sifted in February, she said she was jumping on a plane to the US to deliver a term sheet, which was highly likely Filed’s.
“Filed is the first platform we’ve seen that delivers immediate ROI without disrupting critical workflows,” Schultz said in a statement. “While others talk about AI potential, Filed is already multiplying capacity for firms caught in the talent squeeze — exactly what the market needs right now.”
Read the orginal article: https://sifted.eu/articles/ai-startup-filed-raises-17m-to-supercharge-tax-firms-capacity/
