Vancouver-based software startup Boast.ai has secured $30 million CAD in Series A financing from growth equity firm Radian Capital.
Boast.ai’s software platform automates the process for claiming R&D tax credits in the United States (US) and Scientific Research & Experimental Development (SR&ED) tax credits in Canada.
“Boast.ai is poised to…cement its position as the unified system of record for R&D data.”
An almost ten-year-old company, the $30 million represents the first institutional financing for Boast.ai, which bootstrapped its way to “eight-figures in revenue.” Boast.ai founders, Alex Popa and Lloyed Lobo, told BetaKit in an interview they are now looking to scale Boast.ai’s reach in order to tackle what they see as a sizable market opportunity.
Since 2011, Boast.ai has reportedly doubled its growth year-over-year and garnered close to 1,000 customers. It provides those companies with a platform making it easier, throughout the year, to track the required details for R&D tax credits claims that are due by the end of every tax season. The company has reportedly helped companies secure more than $200 million CAD in such tax credits since its inception; claiming to have recovery rates in the US of 100 percent and more than 98 percent in Canada.
“R&D is the engine of the modern economy, and innovative companies should be able to access the tax credits they’re entitled to,” said Popa, Boast.ai’s CEO. “We empower companies from startups to large enterprises to quantify the value of their R&D efforts, then leverage that asset through a successful R&D tax credit application which allows them to grow their business without unnecessary outside capital.”
Canada’s SR&ED program provides tax incentives to Canadian companies to conduct R&D research. According to the federal government, the program provides more than $3 billion in tax incentives to more than 20,000 claimants annually.
An Organisation for Economic Co-operation and Development (OECD) report from 2017 found that R&D tax incentives “have become a major tool” for promoting business research and development. As of 2017, 30 of the then-35 OECD countries, the majority of EU countries, and a number of non-OECD economies, provided tax relief on R&D spending. According to Boast.ai, Canadian and US governments, combined, provide nearly $20 billion CAD in tax credits each year.
Lobo and Popa compared Boast.ai’s automated platform to the accounting and tax firms that traditionally help companies with their claims, arguing that Boast.ai has a vast opportunity to further expand its reach in the market, within North America and internationally. The founders expressed confidence that their startup will be able to attract 5,000 customers over the next four to five years, which they claimed would garner more than $100 million in revenue.
“There’s nothing stopping us from doing that,” Lobo told BetaKit.
Noting Boast.ai’s year-over-year growth, Radian Capital partner Jordan Bettman added, “with this infusion of new capital behind a game-changing enterprise software solution, Boast.ai is poised to revolutionize the way businesses fund their growth and cement its position as the unified system of record for R&D data.”
To meet its goal of 5,000 customers, Boast.ai is also exploring new ways to reach those businesses. The startup has begun working with channel partners, such as accounting firms, that use Boast.ai’s software to deliver R&D tax credits to their own customers. Lobo pointed to plans to expand this aspect of Boast.ai’s business.
Boast.ai is also working to diversify its product offerings. In addition to its automated platform, the startup offers an R&D line of credit to its companies. Boast.ai prepares and estimates a company’s ongoing R&D needs and provides financing upfront for those costs – similar to Clearbanc’s revenue-share financing model.
The founders told BetaKit they have big plans to expand Boast.ai’s line of credit capabilities over the next year, but declined to provide additional detail.
“We’re [already] automating the application process, now we are saying our application process is so good that we can give you money now from the first quarter of R&D expenses you incur,” said Lobo.
“I think we get to $100 million in revenue just focusing on the US and Canada, but there’s a huge market globally. And then, when you tie the ability front cash against ongoing R&D, … it blows all the manual competition and tax firms out of the water,” Lobo stated. “There is a lot of opportunity.”
Boast.ai is also looking to use its newfound capital to grow its team, which currently sits around 35 employees that are remotely based across Canada, the US, and Europe. The startup plans to increase its employees based to more than 70 over the next year, with an emphasis on increasing sales and marketing.
Image courtesy Boast.ai