Fintech: Black Ore, an AI automating tax prep, gets $60MM from a16z & Oak HC/FT
Will robots tax other robots once we are all digitized?
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You’re the best, today’s agenda below.
FINTECH: Black Ore Emerges From Stealth With $60MM In Funding To Bring AI To Financial Services (link here)
LONG TAKE: An Obituary For Mint.com, Which Inspired A Fintech Revolution (link here)
PODCAST CONVERSATION: Engineering The Dollar From ETH And Perpetuals, With Ethena Labs Founder Guy Young (link here)
CURATED UPDATES
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Digital Investment & Banking Short Takes
FINTECH: Black Ore Emerges From Stealth With $60MM In Funding To Bring AI To Financial Services (link here)
Black Ore, an AI fintech startup, has emerged from stealth mode after securing a $60MM funding round. The company dedicated the past two years to developing its tech architecture and training its models. Eyal Shinar, the CEO of Black Ore, is a repeat fintech founder, having previously built Fundbox, a $1.1B fintech unicorn that powers payments and lending solutions for SMBs.
Black Ore’s product, Tax Autopilot, is designed to streamline the tax process by using AI to accelerate federal and state tax processing for individuals. The platform lets accounting firms upload tax documents and data, where algorithms transform data and calculate the tax return. It generates both the tax return and supporting workpapers, with a review workflow. Black Ore supplements this tech with a team of CPAs, who conduct a preliminary review of the machine labor before returning final documents to the accounting firm for submission.
During an interview with Bloomberg, Eyal Shinar, the CEO of Black Ore, discussed the company's tech stack. While Tax Autopilot uses Machine Learning and Computer Vision (a subset of machine learning that enables computers to analyze videos and digital images), Black Ore partners with a third party for Language Model Models (LLMs) due to the cost associated with building their own.
However, Shinar emphasized that while LLMs play a role, they account for only 10% of Black Ore's proposition. Tax regulations involve domain-specific terminology, so LLMs have to be augmented to capture the nuances and intricacies of tax-related language with the required precision.
Black Ore's $60MM Series A is large relative to fintech trends, but par for the course for AI startups. However, the company's products align more closely with other wealthtech / personal financial management (PFM) deals we have encountered. There are a variety of financial planning software solutions that use AI to automate financial processes, including tax-related tasks — notable examples include Range, which secured $12MM in its Series A funding round, Canoe Intelligence, which raised $25MM in its Series B, and Conquest Planning, which raised $24MM (CAD).
There is about $10B of annual revenue at play in the tax preparation market. AI opens up ways to reduce meaningful parts of the workflow and make automation far more powerful. For now, the hybrid approach of human and machine collaboration will do the job. The substantial funding round for this company reflects such potential, as well as the oligopoly in tax that could be disrupted. Further, relevant machine learning and generative models could be used in more complex use cases down the line as well, growing the TAM. There are also ways to plug into downstream parts of the industry, like financial and wealth planning, which could bring in product revenues around assets.
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Blueprint Deep Dives
Long Take: An Obituary For Mint.com, Which Inspired A Fintech Revolution (link here)
Intuit's decision to shut down Mint.com marks the end of an era for one of the original pioneers in personal financial management (PFM) software.
Mint's intuitive platform revolutionized how users interacted with their finances, offering a seamless experience that aggregated personal banking and investment information. Despite its innovative start, Mint's growth stagnated over the years, leading Intuit to transition users to Credit Karma, a platform with a stronger emphasis on financial product offerings. As Mint.com sunsets, we reflect on its significant contribution to making financial oversight accessible and user-friendly, as well as bootstrapping the embedded finance movement.
🎙️ Podcast Conversation: Engineering The Dollar From ETH And Perpetuals, With Ethena Labs Founder Guy Young (link here)
In this conversation, we chat with Guy Young - the CEO and Founder of Ethena Labs, the crypto infrastructure company building USDe which is the first-ever scalable stablecoin not reliant on existing banking institutions alongside a permissionless 'internet bond.'
Prior to Ethena, Guy spent nearly a decade working in the traditional finance industry across investment banking, hedge funds, and private equity firms, most recently at Cerberus Capital Management, a $50bn investment fund.
His most recent position was Head of Principal Investments at a Cerberus affiliate, where he led the firm’s expansion into Australian markets and oversaw strategic investments across banking, specialty finance, insurance, fintech, and more.
Curated Updates
Here are the rest of the updates hitting our radar.
Banking
⭐ Dubai Investments Raises Stake In UK Digital Bank Monument To 16.93% - Gulf News
Goldman Sachs Bids To Offload GM Credit Card - Finextra
ANZ Plus Launches Digital Home Loans, Plots Expansion - Financial Review
Insurtech
Insurtech Startup Flitter Raises €3.5MM For Expansion And Profitability By 2024 - Tech.EU
Allianz invests In US Insurtech NEXT - Insurance News
Insurtech Lemonade Surpasses 2MM Active Clients - Crowdfund Insider
Lending
⭐ Klarna Studies ‘Eventual IPO’ After First Profit In 4 Years - Financial Times
Wealthtech
⭐ Private Investment Management Platform Arch Raises $20MM - Finextra
Danish Wealthtech Startup Performativ Snags €5.5MM - Finextra
Era, AI-Powered Wealth Management Platform Founded by Stripe Alumni, Announces $3.1MM Seed Led by Northzone - Businesswire
Prosper Raises £3.2MM Angel Round To Build The Wise Of Wealthtech - Angel News
Financial Operations
⭐ Cloud Payments Firm Volante Raises $66MM In Strategic Funding - Finovate
Fintech Investor Acton Capital Launches New €225MM Fund - Altfi
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