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June 29, 2022

Why QED invested in April

​We are excited to be backing April. We had the pleasure of getting to know the April team in September of 2021 when we invested in their Seed round via Bolt, our dedicated seed-stage strategy.

Since then, we have been tremendously impressed by the team, progress on the product front and traction on the demand side. Doubling down on their Series A was an easy decision. 

One of our goals at QED Investors is to invest in businesses leveraging technology to improve folks' financial lives. April is squarely rooted at the intersection of leveraging complex technology to help manage folk’s taxes, one of the most critical aspects of a healthy financial life.

It’s not a secret taxes are taxing. The problems consumers encounter when filing their taxes are acute, presenting a tremendous opportunity for banks and fintech applications to build deeper customer relationships by using April’s embedded tax-filing solutions.

Taxes are one of the most important recurring financial events for a diversity of consumers. The average tax refund was approximately $2,800, the largest single non-income-related cash inflow for many. Given this is such a major financial event, there is an opportunity to shift taxes from an annual event to integrating taxes into wholistic and continuous financial planning.

April enables consumers to file their taxes easily and quickly, track the status of tax refunds in real time and optimize their withholdings. During the past filing season, April users were able to file their taxes as fast as 15 minutes while using applications they already know, use and trust.

April has built a “tax engine” that leverages AI and machine learning to analyze tax codes and parse tax forms to streamline filings. Building a “tax engine” from scratch is very complex but a critical prerequisite to transforming the tax-filing system.

Over time, April users will enable users to optimize their withholdings and track their refunds in real-time. Ultimately, when one over-withholds their taxes (i.e. receive a tax refund during tax season), they are making a 0% interest “loan” to the government, while their own individual cost of capital is often +30%. A tax refund is simply the government giving folks their hard-earned money back to them. For folks that over-withhold, April’s insights could enable banks and fintech applications to increase their user’s net take-home pay by roughly $100 per paycheck. It is not a stretch to see how solutions such as this could shape the fabric of the U.S. economy. Users that under-withhold (i.e. owe taxes during tax season) could use April to ensure they have enough cash on-hand to pay taxes owed come April.

April enables banks and fintech applications to deepen relationships with their customers, increase revenue per user, unlock whole household insights, and capture both direct deposits and tax refunds. April is building an embedded tax filing infrastructure and is driving a paradigm shift; making taxes an opportunity to continuously optimize engagement rather than a siloed annual event.

The fintech ecosystem has made enormous progress by harnessing banking data to enable better financial products. By filing taxes, April is positioned to drive the next wave of innovation across the fintech ecosystem by unlocking “whole household insights.”

Whole household data has escaped the fintech industry until now and is particularly important when lending or giving financial advice. Historically, when folks provided their financial statements or linked their bank accounts to receive advice or apply for a loan, they had to remember to share all of their data. With April, this process becomes much more straightforward for both users and banks alike. 

No matter the macroeconomic environment, we have found banks and fintech applications must keep a close eye on KPIs such as user growth, user retention, revenue per user, and unit economics. April is driving a paradigm shift by moving taxes from a one-time event to a continuously managed and optimized experience.

To be clear, tax filing is a very complex technological problem to solve. The margin for error is slim, the user experiences are nuanced and the ability to support users navigating an ever-evolving tax code is sine qua non.

The April team is the right team to tackle these problems and we could not be more excited to be backing them.