- Fonoa is the first digital tax solution with global coverage, and enables companies including Uber, Zoom, Booking.com and Teachable to be seamlessly tax compliant in every market they operate in
- The company has announced a new Series B funding round of $60m led by Coatue and supported by Index Ventures, Dawn Capital, OMERS Ventures, FJ Labs, Moving Capital
- Following a sevenfold revenue increase in 2021, the new funding will enable Fonoa to double in size by the end of 2022, release new products and continue its global expansion
- Fonoa is part of a collection of innovators which are breaking down barriers to companies operating globally
Innovators like Fonoa are powering the possibility of a borderless global single market
By Hannah Seal, Partner
Today, companies want to be global from day one. But achieving this has long been a pipe dream: instantly hiring local experts on everything from employment law to taxes in each country, or even state, simply isn’t realistic. Despite the global economy being more connected than ever, local laws, regulation and governments are becoming more complex.
Fonoa is one of the innovators breaking down these barriers – and bringing us a step closer to a virtual global single market in the process. Removing the arduous need to unpick local laws, Fonoa enables companies of any size to become instantly tax compliant in any market. They are doing for taxes, what the likes of Adyen did for payments (making it easy to accept hundreds of methods around the world) and Remote did for hiring: erasing borders when employing remote workers globally. Technology is taking care of the increasing burden, and as a result, creating a near bureaucracy-free way of doing business.
By building plug-and-play, one stop solutions, Fonoa and its contemporaries hold the key to operating seamlessly across every region, country and economic block in the world. As the global economy becomes increasingly interlinked, they have an immense opportunity for growth.
When it comes to tax, policy makers and governments are in a catch-22. While there’s a strong desire to remove red tape and promote global commerce and trade, there’s also pressure for increased regulation of digital companies, and a clear need to collect tax revenue.
The result is that rules for tech and ecommerce firms are increasing fast: more than 90 countries across the world have introduced complex tax rules for digital transactions, shifting the liability to businesses and placing an increased responsibility on them to calculate, collect and remit their taxes globally.
For companies, it means tax in a new market can quickly become a challenging minefield, requiring legions of implementation consultants and hampering global expansion.
Using its API solution, Fonoa solves the problem instantly. It determines and calculates the right amount of tax a business should pay, in the right place, at the right time, and creates a locally compliant invoice after a transaction takes place. Each country’s government then receives real-time reporting, so they know all rules are being followed. The result is company operating costs are sizeably reduced, while tax compliance is easily increased.
Fonoa was founded by three Uber alumni – Davor Tremac, Filip Sturman, and Ivan Ivankovic – who experienced first-hand how difficult it is to correctly calculate and report taxes to authorities throughout the world. Realising the existing crop of tax software solutions have not been built for the digital age, and don’t understand how digital-first businesses operate, they built Fonoa from the ground up as a simple plug-and-play platform.
Since the company’s Index-led seed round at the end of 2020, Fonoa has rapidly expanded. It experienced seven-times revenue growth in 2021 and raised $20.5m Series A funding at the start of this year. Now, with online payments expected to reach $8.5tn in 2022, and taxes being part of almost every transaction, Fonoa’s potential market is set to explode.
The new $60m in Series B funding will enable it to serve new demand, while improving features and launching new products. The company has already bolstered its team fivefold in the last year to 110 employees across 20 countries and 35 nationalities: in the next six months, it plans to double in size.
“As we’ve grown as a business we’ve seen a number of companies wishing to reduce the cost of their operations and improve profitability when it comes to managing their indirect taxes,” says Davor Tremac, Fonoa’s CEO and co-founder.
“At the same time, we’ve seen countries across the globe try to close their VAT gaps through new regulations and so there has been heightened demand for companies to increase their compliance. Fonoa is the only tax software solution built for the digital age and means that companies can focus on what they do best while we make sure they charge the right amount of tax, in the right place, at the right time.”