As Nicholas Rudder built his last startup, an educational marketplace called ScholarSite, he kept running into the same problem: tax.
“Marketplaces are liable for tax on their entire GMV (gross merchandise value) not just their take rate, so every new country meant a maze of registrations, filings, deadlines, and risk,” Rudder told TechCrunch. “It became a constant distraction. Instead of building the business, I was spending time deciphering international compliance rules I never wanted to become an expert in.”
As he and co-founder Adrian Sarstedt were looking to shut down ScholarSite (later calling it Sphere), they decided to keep the name but turn the product into something new.
“The world was going global, but compliance infrastructure hadn’t kept up,” Rudder said.
In 2023, they launched Sphere as a tax software vendor that helps companies stay in compliance as they scale across borders. The company targets Series B to IPO stage companies with a global customer base, Rudder said.
“We help companies collect tax on customer transactions,” he continued, explaining that companies have to collect tax on purchases and remit it to authorities each month or quarter.
Sphere helps “automate registration, calculation, filing, and remittance obligations for companies,” he said. Sphere spent two years in stealth before officially launching, and clients now include the vibe coding platforms Lovable and Replit, as well as the AI voice company ElevenLabs.
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As an ed-tech marketplace, it raised a $4.3 million seed. On Tuesday, as a tax platform, Sphere announced a $21 million Series A led by a16z.
Rudder says the product takes less than 24 hours to set up. It has integrations into major billing platforms, like Stripe and Campfire, allowing Sphere to pull a company’s transaction data and assess global tax exposure, he said. Calculating the taxability of a transaction is where Sphere’s AI tax review and assessment model engine comes in, he said — or, in other words, TRAM.
“TRAM ingests and codifies the rules in every jurisdiction and creates a set of tax determinations” — like if something can be taxed or not — “along with reasoning and backing citations for that determination,” Rudder, the company’s CEO, explained.
Sphere’s human team reviews and approves the outputs of TRAM, and approves them so that it can be pushed into a tax engine that applies tax to transactions in real time.
“That part of the system has no AI so there is zero chance of hallucinations.”
Sphere also monitors how much tax a company owes in what region, and is integrated directly into more than 100 tax authorities in the world, so companies can register …