Peter Thiel’s Founders Fund enters India with investment in ClearTax

PayPal co-founder and early Facebook investor Peter Thiel co-founded Founders Fund. Photo credit: Heisenberg Media.

India’s income tax returns filing startup ClearTax continues to notch up an impressive roster of iconic investors. Earlier this month, it unveiled angel funding from the who’s who of Silicon Valley. The angels included PayPal co-founder Max Levchin, WhatsApp business head Neeraj Arora, AngelList founder Naval Ravikant, Gmail lead developer Paul Buchheit, Uber investor Scott Banister, and Airbnb investor Elad Gil.

Now it has announced a pre-series A funding round of US$2 million from Founders Fund Angel and Sequoia Capital. Founders Fund Angel is the early stage investment arm of the Silicon Valley VC firm whose portfolio includes Airbnb, Facebook, and SpaceX. Among its general partners is Peter Thiel, co-founder of PayPal. ClearTax is its debut investment in India.

“Sequoia Capital and Founders Fund are the top VCs in the world, and they have deep understanding of the fintech space. We also get to work with the PayPal Mafia!” says Archit Gupta, founder and CEO of ClearTax, which is a Y Combinator startup.

See: How ClearTax won investors like PayPal founder, Gmail creator, and WhatsApp biz head

A tax-saver add-on

Gotta stand out. Photo credit: 401(K) 2012.

ClearTax has been targeting India’s teeming millennials with a website and mobile app that are easier to use and better designed than the Indian government’s site for e-filing of taxes. Now it is adding on a tax saving feature.

“We saw from our data that the millennial taxpayers make a lot of mistakes with their tax savings. They are in the 20-30 percent tax bracket – that is, for every 100 rupees they earn, they pay 20-30 rupees in tax,” Archit explains to Tech in Asia. “Basically, what we have done is encoding tax saving options into our tax filing product.”

The product helps users to invest in tax-saving instruments according to their preferences. For example, if the taxpayer is conservative about saving, he may want to invest in PPF (public provident fund), which has a 15-year lock-in period but a good rate of return – 8.1 percent. “Earlier, if you wanted to get a PPF account, you had to go to the post office, fill up forms, wait, and so on. Now you can do it on the ClearTax platform.”

ClearTax claims 1 million Indians are using it for e-filing of taxes, which comprises only 3 percent of the total number of taxpayers in the country. This leaves a lot of headroom for growth. Besides, over 10,000 CA firms and thousands of businesses are also using ClearTax. Small and medium businesses are thus another growing user base for the startup.

Archit, who has a master’s in computer science from the University of Wisconsin-Madison, founded ClearTax in 2011 along with his father Raja Ram Gupta, who is a chartered accountant.