a16z leads $21M Series A into AI-native tax compliance software Sphere

As Nicholas Rudder built his previous startup — an educational marketplace called ScholarSite — he repeatedly ran into one persistent issue: tax.

“Marketplaces are liable for tax on their entire GMV, not just their take rate, so every new country meant a maze of registrations, filings, deadlines, and risk,” Rudder told TechCrunch. “It became a constant distraction. Instead of building the business, I was spending time deciphering international compliance rules I never wanted to become an expert in.”

As he and co-founder Adrian Sarstedt prepared to shut down ScholarSite — later renamed Sphere — Rudder decided to keep the name and transform the product entirely.

“The world was going global, but compliance infrastructure hadn’t kept up,” he said.

In 2023, Rudder launched Sphere as a tax compliance software platform designed to help companies stay compliant as they scale across borders. Targeting Series B through pre-IPO companies with international customer bases, Sphere handles the full lifecycle of global tax obligations.

“We help companies collect tax on customer transactions,” Rudder explained, noting that businesses must collect taxes, then remit them monthly or quarterly. Sphere automates registration, tax calculation, filing, and remittance.

After two years in stealth, Sphere now counts Lovable, Replit, and AI voice company ElevenLabs among its customers.

Formerly an edtech marketplace, Sphere previously raised a $4.3 million seed round. On Tuesday, the startup announced a $21 million Series A led by a16z.

How Sphere Works

Rudder says onboarding takes less than 24 hours. Sphere integrates with major billing systems, such as Stripe and Campfire, to pull transaction data and determine a company’s global tax exposure. Its AI-driven TRAM (Tax Review and Assessment Model) processes and codifies tax rules across jurisdictions, issuing determinations and citations.

Sphere’s human team reviews every TRAM output before pushing approved rules into a tax engine that applies tax in real time.
“That part of the system has no AI, so there is zero chance of hallucinations,” Rudder noted.

Sphere also tracks what companies owe globally and integrates directly with more than 100 tax authorities. Users can register for new tax jurisdictions through the platform and receive live updates on approvals.

Sphere automatically generates tax filings, debits tax from customer accounts, and remits payments directly to authorities — delivering the exact tax solution Rudder wished he had while building his first startup.

Competition and Ecosystem

Sphere operates in a market with established players, including Anrok and Avalara. But despite Stripe offering global tax tools, Rudder views Stripe as a partner, not a rival.

“Sphere is one of only three tax vendors globally with a native integration to Stripe’s Billing and Checkout products,” he said, adding that Sphere covers compliance stages Stripe does not.

Raising the Round

Rudder described the fundraising process as “unintentional,” saying he wasn’t actively searching but needed to accelerate execution.

“When we met a16z and heard what they’d done for similar companies in compliance and fintech, we knew they were the right partner,” he said.

Marc Andrusko, a partner at a16z, said the firm first met Rudder during ScholarSite.
“It was clear Nick had the horsepower, grit, and drive needed to be an exceptional founder,” Andrusko said.

When the team later heard buzz around Sphere, it took “all of five minutes” to realize Rudder was behind it.

What impressed a16z most was Sphere’s deep localization.

Unlike legacy players that rely heavily on third-party consultants for specific regions, Sphere built native integrations into local tax systems and paired them with automation.

YC and Felicis Ventures also joined the Series A. The new capital will go toward expanding global integrations, scaling engineering and AI teams, and building an international sales force.

“I want this product to be the indispensable tool that finance teams rely on when entering a new market,” Rudder said. “Not just for indirect tax, but for every form of transactional compliance they may not even realize they’re exposed to.”

This article was updated to clarify that Sarstedt is no longer at the company.