While building his previous startup, an educational marketplace called ScholarSite, Nicholas Rudder repeatedly encountered the same difficult problem: tax compliance. He explained that marketplaces are responsible for tax on their entire gross merchandise value, not just their commission. This meant that every new country his business entered presented a complex maze of registrations, filings, deadlines, and financial risk. Rudder told TechCrunch that it became a constant distraction. Instead of focusing on growing the business, he was spending his time deciphering international compliance rules he never intended to master.
As he and his co-founder Adrian Sarstedt were preparing to shut down ScholarSite, which they later renamed Sphere, they made a pivotal decision. They chose to keep the name but completely transform the product. Rudder observed that the world was rapidly going global, but the necessary compliance infrastructure had failed to keep pace with this expansion.
In 2023, they officially launched Sphere as a tax software vendor designed to help companies maintain compliance as they scale across international borders. The company specifically targets Series B to IPO-stage companies that have a global customer base. Rudder explained that their service helps companies collect tax on customer transactions, as businesses are required to collect tax on purchases and then remit those funds to the relevant authorities every month or quarter.
Sphere automates the registration, calculation, filing, and remittance obligations for companies. The company operated in stealth mode for two years before its public launch. Its current clients include the low-code platforms Lovable and Replit, as well as the AI voice company ElevenLabs.
The company’s journey began in the ed-tech space, where it raised a $4.3 million seed round. More recently, as a tax platform, Sphere announced a $21 million Series A funding round led by Andreessen Horowitz. Rudder states that their product takes less than twenty-four hours to set up. It integrates with major billing platforms like Stripe and Campfire, allowing Sphere to pull a company’s transaction data and assess its global tax exposure.
The complex task of calculating the taxability of a transaction is handled by Sphere’s AI tax review and assessment model engine, known as TRAM. Rudder, the company’s CEO, explained that TRAM ingests and codifies the rules for every jurisdiction. It then creates a set of tax determinations, such as whether something is taxable or not, and provides reasoning and legal citations for each determination. A human team at Sphere reviews and approves all of TRAM’s outputs before they are pushed into a traditional tax engine that applies tax to transactions in real time. This final step involves no AI, eliminating any risk of algorithmic hallucinations.
Sphere also monitors how much tax a company owes in each region. The platform is directly integrated with over one hundred tax authorities worldwide, enabling companies to register for various tax jurisdictions directly through Sphere. Once a company submits a registration, Sphere sends the information to the tax authorities and notifies the company when their registration is processed and they can begin collecting tax in that region.
Finally, Sphere assists with filing and remittance. It automatically generates tax returns and submissions, debits the owed tax from its customers’ bank accounts, and makes the payments to the tax authorities. Rudder said this is exactly the product he wished he had when he was building his first company.
Other companies in this market include legacy players like Anrok and Avalara. Although Stripe also offers a global tax calculation and collection service, Rudder does not view them as a direct competitor but rather as a partner. He noted that Sphere is one of only three tax vendors globally with a native integration into Stripe’s Billing and Checkout products. He added that Sphere addresses use cases that Stripe does not, such as fulfilling the complete end-to-end compliance lifecycle.
Rudder described his funding process as somewhat unintentional. He and his co-founder were already considering raising capital but knew they needed to move quickly to achieve their ambitions. When they met with Andreessen Horowitz and learned what the firm had accomplished for similar companies in the compliance and fintech sectors, they were convinced it was the right partnership.
Marc Andrusko, a partner at Andreessen Horowitz, said the venture firm first met Rudder when he was working on ScholarSite. Although they did not finalize a deal for that initial business, it was clear to Andrusko that Nick possessed the intelligence, grit, and drive needed to be an exceptional founder. A few years later, Andrusko’s team began hearing promising rumors about a new company called Sphere. It took only minutes to connect the dots and realize it was Nick’s new venture after the pivot, prompting an immediate outreach for an update.
Andrusko was particularly impressed by how deeply integrated Sphere was within local geographies. He noted that while both legacy players and newer venture-backed competitors often hand customers off to third-party consulting firms to manage certain regions, Sphere took the time to build direct integrations into local systems. Combined with their AI automations, this allows Sphere to facilitate the entire sales tax compliance process completely end-to-end.
Y Combinator and Felicis Ventures also participated in the funding round. The new capital will be used to build more infrastructure for connecting with additional local tax authorities, expand the AI and engineering teams, and develop an international sales team.
Rudder shared his ultimate vision for the product. He wants Sphere to become the indispensable tool that finance teams turn to when they plan to expand into a new market. His goal extends beyond indirect tax to encompass every form of transactional compliance that companies may not even realize they are exposed to.