Sam Ross and the Birth of Numeral
Sam Ross, who co-founded and leads the startup Numeral, got the idea for his sales tax compliance company during his travels. He previously worked as a product manager at Airbnb and was looking to blend his entrepreneurial spirit with his love for travel.
“Back in early 2018, I wasn’t working remotely the way I am now,” he shared in an interview. At that time, consumer businesses were booming, and he launched a few self-funded e-commerce brands to support his journey. Among these ventures was an online jewelry shop, and he still manages a Vitamin DTC site.
While he enjoyed the flexibility his business gave him, Ross often found himself frustrated by the cumbersome process of dealing with sales taxes for his products.
Before 2018, e-commerce and SaaS companies didn’t need to collect sales taxes in states where they had no physical presence. However, a pivotal Supreme Court ruling that year changed all that, mandating that these companies must now collect taxes based on the customer’s location.
“Suddenly, I had to figure out tax collections for over 40 states because of my clients in California,” Ross reflected. “It was a real headache.”
When he approached the Startup Accelerator Y Combinator in 2023, he was encouraged by his former supervisor from Airbnb, Gustaf Alstromer, to create a startup that would automate sales tax management.
Recently, Numeral announced a significant milestone: it secured $35 million in Series B funding, valuing the company at $350 million. This comes on top of an $18 million Series A round, which included participation from investors like Benchmark, UNCORK Capital, and Y Combinator, with some co-founders being members of the popular DJ duo The Chainsmokers.
Although various software products for managing taxes exist, Ross believed AI could simplify the process and operate like a human tax accountant. This involves tracking changes in tax laws across more than 11,000 jurisdictions, managing tax-related correspondence, and even filing and paying taxes on clients’ behalf.
Ross noted that AI can effectively manage most sales tax tasks since the majority of the rules are quite clear-cut, minimizing the chances of errors.
He added, “But some of the tax laws are rather strange. For instance, in New York, if you buy a whole bagel, it’s tax-free, but once you cut it in half, it’s considered ready to eat and becomes taxable.”
Numeral’s AI system is designed to understand thousands of such intricacies.
In the past year, the startup’s revenue skyrocketed by 3.5 times, and it now supports over 2,000 clients in the software and e-commerce space, including companies like Eight Sleep, Graza Olive Oil, and Manus.
Though sales tax management might sound niche, a few other startups are addressing it as well. Competitors such as Anrok and Zamp are on the scene, alongside the established player Avalara, which is owned by Vista Equity Partners and has plans to go public later this year.
Ross believes that Numeral’s international focus sets it apart from competitors.
“We handle tax filings for clients in places like Tanzania and Kenya, which typically relied on CPA firms,” he noted.
