Rivet Tax raises $5.1M seed to bring AI-powered context management to tax preparation

on very soon. We will talk to you soon. Have a great rest of your day. Our next guest is in the reream waiting room. While we bring in Nick, uh, let me tell you about public. com investing for those that take it take it seriously. Multiasset investing, industryleading yields. They're trusted by millions folks.

And we have Nick from Rivet in the Reream waiting room. Let's bring him into the TBN Ultradum. Nick, how are you doing, guys? John, Jordy, great to see you guys both. How are you? We're fantastic. Big day. I I already rang the gong just a few minutes ago. I want to ring it again. What you got for me?

Uh, we're uh excited to announce our seat round. It's a big day for Rivet. How much? 5. 1. 5. 1. Uh why the any special meaning to the number or just a 100k flyer came in at the end? You know what's funny is this business is um you know it's self- sustaining. When you sell a service to a customer, they pay you money.

They typically pay you more than it costs to employ people um at least in aggregate. And um we were really selective about who we chose to work with. And so we start off really only looking for three or four uh to really give us a buffer to uh invest in a sales team and some more tax partners ahead of next season.

But uh you meet with one great firm, they talk, you know, more people show up. Uh we were lucky to get to work with Hastax Susa and XYZ for this round. And so uh we're very lucky. What's the uh what's the core pitch for the business right now? How are you explaining it to new customers?

Okay, so I'll give the pitch as a customer. It's just an amazing service. I've I've uh I've used Rivet uh over the last couple years and uh so that's that part's easy. It's like you guys are really dialed like incredibly thoughtful. It's just smooth. Um and so that part makes sense.

What I want to understand is like the the the pitch to investors. I'm actually an investor myself. So uh uh but not biased like the product's truly truly amazing. But uh but what's the updated pitch to investors since it's been probably a couple years since uh since I participated? Yeah.

Um to to customers, we're a tax prep firm, right? You'd engage with us no differently than Berkeland or Anderson or even Deote. We have 30X big four accountants on the team. That's pretty straightforward. Um nobody really asks why we raised or what we've built when we sell or when we onboard clients.

Uh when we talk to investors, it's it's oftentimes focused on things that customers don't really care about. It's what have you built? You know, why are you building it? The toughest part of building this business is context management.

When you hire a person to do a job, the context for what they did, why they did it, why they chose to put, you know, something or, you know, recommend a certain classification is hidden in their head. and it would be prohibitive for their time to write literally everything down.

And so every tax season as new people join the firm, as people leave the firm, as you know, we get rolled up by some huge PE firm, a lot of the p a lot of the actual work starts from scratch, these larger firms.

And so clients get asked the same questions over and over again because no one remembers anything because no one's worked there for more than six months. And it's deeply painful for customers, right? and they don't realize why it happens.

They just know it sucks and and it's frustrating and uncomfortable and wait you don't remember my EIN. I talked to you guys 3 months ago. Um what we've built sits on the back end and so it quietly ingests, saves, tracks, you know, whatever you want to call it.

Um everything that is discussed about and given to us from a client. And so it's not just emails, it's Zoom calls, it's Slack transcripts, it's text messages they sent us. And just tracking all of that in one place is a massive problem. It's a massive, you know, build.

Um, that's what allows us to run this practice at scale efficiently, right? And it's it's, you know, tax prep isn't just data entry from the W2 to the tax software. It's it's gathering where the W2 was in the first place. And so what we've built doesn't really replace the accountants.

just automates the tedious parts of their job. Remembering everything, organizing all the information wherever it was sent and and making sure it's stored in the right place. Um, it's it's almost like Microsoft suits and remembers everything. It's always there.

It's uh it's it's it's really cool to get to work with if you've been working one of these larger firms for for decades. Have you bought any companies? No. No. Uh well actually yes, we did. Um we acquired a small AI company called Lobby. Um, originally we u met Wilson Hobbs, the founder and CEO.

Um, and he was calling for one of our roles and and you know, we were deeply impressed by him and his background. Um, and as we did the interview process, you know, we learned more about lobby and what he had built there. It was a um, it was a website. You could go to it. You could upload documents.

You could um, talk to those documents. Sounds pretty similar to what we're building here, right? It just needs to be done with tax. And so as we did the interview process, I said, "Wait a second. What's happening to the team? What's um what's happening to the product? " He says, "You know, not really sure.

We haven't quite figured that out yet. " And I said, 'Well, we should have you join the team. That part's easy. Um but we should also acquire lobby. You know, I think I think what you built is deeply special and and we should have it here at the business. And so, uh Wilson joined the team last year.

It's his one-y year anniversary is actually yesterday. Wow. And uh he's since brought on two of his uh former team members. Yeah. One year anniversary. It's exciting. Um that's big. That's big for us, you know. Um, but you haven't bought any, uh, tax prep firms, I'm sure.

How how many times how many times have people tried to get you to do a roll up? Uh, I think every investor meeting for the first 6 months was, "So, how many firms have you bought? Why aren't you buying more? You know, aren't you going to raise $100 million to roll up 50 firms? " Chat's asking what the website is.

It's rivet. tax. Rivet. tax. Uh, well, congratulations on all the profit. in 30 seconds since we're tight here, but uh why why have you chosen not to roll up tax, you know, tax prep firms and, you know, make them AI native? Yeah, good question. Um, it's much easier to steal their business than it is to buy them.

The change management of of of rolling up a firm, convincing the people who work there that they'll like us, uh, the whole the whole process is deeply difficult. You can expect to lose about half the customers, half the revenue, half the team when you buy somebody. Whoa. Um, it's not worth it.

It's much easier to just tell people about what we do and uh bring them onto the platform. Much much easier. That makes a ton of sense. Love it. Well, absolute dog. Absolute dog. Well, thank you so much for stopping by. Great to have you on. Uh we we'll talk soon. Congratulations service. We'll talk soon.