Nanjing-based corporate tax management Software-as-a-service (SaaS) provider Yunzhangfang has closed its Series D round financing, bagging USD 85 million from investors led by London-headquartered Vitruvian Partners, 36Kr reported on Tuesday.
This new round for the startup, which was founded in 2015, came about one year later when it closed the RMB 300 million (42.8 million) Series C round led by Hillhouse Capital in November 2018.
New funds will be used on technological research over areas including robotic process automation, elastic computing, Platform-as-a-Service and financial knowledge graph, on marketing to expand the client base and also on talent hiring.
Many small-and-medium-sized enterprises (SMEs) in China tend to outsource their financial book-keeping to professional agencies.
Yunzhangfang’s integrated and automatic book-keeping tools first came to serve such agencies, sparing them lots of manual work and thus improving their efficiency. It claims that it has served more than 3,000 book-keeping agencies in China on its website.
Later, the startup has also rolled out tools to serve small-and-medium-sized enterprises (SMEs), helping them evaluate and prevent corporate taxation risks and also aiding them in paying employees’ personal income taxes and public insurance premiums.
In China, each month a company needs to deduct the personal income tax and premiums for various public insurance policies such as medical insurance and unemployment insurance from an employee’s entire salary before paying the remaining part. The company also needs to hand over the deducted sum to responding government organs on behalf of the employees the next month.
Yunzhangfang claims that by now it has served more than 1.4 million SMEs located in 26 provincial regions in China, according to 36Kr.
The number of China’s SMEs had exceeded 30 million by the end of 2018, said Miao Wei, minister of the Ministry of Industry and Information Technology, according toShanghai Securities News.
Richard Chen, managing director and Thomas Studd, partner at Vitruvian Partners said that recent changes in China’s taxation regulations and technological revolution has provided a good opportunity for financial SaaS providers to grow.
For example, since the start of 2019, China has increased the basic personal income taxation threshold from RMB 3500 to RMB 5000 and allowed the bar to go up if taxpayers hand over proofs of various costs such as rent costs and children-raising costs. Previously there was only a fixed threshold.
All these changes, although could bring benefits to individuals, also usher in complexity to companies which thus need more financial SaaS services.
He added that his VC firm will work together with Yunzhangfang’s management to consolidate the startup’s leading position in the industry in China.