Fintech company Boast.ai, which helps businesses receive government research and development (R&D) tax credits without all the hassle, on Wednesday announced a $100 million credit facility from Brevet Capital.
The company, which secured $23 million in Series A funding from Radian Capital in December, helps businesses receive up to $250,000 in R&D tax credits without having to wait a year or more for money from the government using artificial intelligence and an in-house team of experts.
“Globally, over $200 billion ... is given by governments in R&D tax incentives to fund businesses,” Boast.ai co-founder Lloyed Lobo told FOX Business, “but the application process in manual, it’s cumbersome, it’s prone to expensive audits, and it takes a lot of time to get the money from the government because you have to incur 12 months of expenses before you get this money.”
In the U.S., these nonrefundable credits are a government benefit given to taxpaying, qualifying businesses under Section 41 of Title 26, of the Internal Revenue Code, in an effort to promote American innovation.
Businesses in nearly every industry reported a collective $18 billion in federal R&D tax credits in 2019, according to global accounting network BDO. The average small- or medium-sized business gets between $150,000 and $200,000 in credits, Lobo said, but the application process to apply for those credits in the U.S. can be tedious.
The co-founder said the $100 million credit facility will further his company's mission "to help innovative companies become successful" by frontloading the cash for businesses.
"Our vision is to help companies fund and fuel their growth without giving up equity in dealing with complex red tape," Lobo said. "...Effectively, we're getting companies larger refunds, faster, at a lower audit grip from the government because we're just doing it proactively through the year, and at the end of the year, it's done."
Boast.ai combines a business's technical systems (project management systems, financial systems, and so on) and Boast.ai's own technical systems to analyze throughout the year what work will qualify for R&D credits and how much time is spent on certain projects.
"We're saying we have the ability to automate that process" to help companies give them "cash now," Lobo said. "Money is so important. People need the money."
Boast.ai's customer base has doubled over the last year; the company has helped more than 1,000 businesses secure more than $200 million in R&D credits so far and plans to expand its workforce from 45 employees to 80 in the next 12 months.
The Caliofrnia-based company also hasn’t spent “a penny” of its $23 million funding from December yet because it’s been profitable, Lobo said.
"R&D tax credits are a huge untapped resource for companies looking to invest in and accelerate innovation," Brevet Capital co-founder and CEO Douglas Monticciolo said in a statement. "R&D tax credits are a valuable form of capital — but the delays can be extremely challenging for early-stage companies."
He continued: "Boast.ai’s AI-powered financing platform eliminates those delays and allows startups to focus on creating new solutions and products while immediately reaping the benefits of their hard-earned R&D efforts."