Israeli startup IVIX, a technology company that says it helps authorities prevent and reduce tax evasion, announced this month that it raised $13 million in seed funding.
Team8 led the investment round, and Citi Ventures, Cardumen Capital, and private investors also participated. The company said the funding will go toward supporting its sales and marketing efforts.
Founded in 2020 and still in stealth mode, IVIX says it built an AI-driven platform that can automatically synthesize both tax authorities’ internal data and publicly available information to identify instances of tax evasion. This allows authorities to better detect those evading taxes, promote deterrence, and generally use their resources more efficiently, the company says.
IVIX is looking to help governments combat the shadow economy, or unobserved economy, which includes not just illegal activities but also any economic activity where the income from goods and services goes unreported and evades tax authorities and government supervision.
According to a 2017 report in Statista, the shadow economy in Greece, for example, was estimated at over 21 percent of the country’s GDP with Italy not far behind, and Spain at approximately 17 percent. The unobserved economy in the UK, Canada, Australia, and Germany stood at about 10 percent, while the US shadow economy was estimated at approximately half of that. In Israel, the shadow economy fell from about 14 percent of GDP in 1996 to 10 percent in 2018, resulting in a non-observed economy of NIS 134 billion ($40 billion), according to a 2020 report by the Taub Center For Social Policy Studies in Israel.
“We are delighted to have closed our seed funding round, led by Team8 Capital. Clients across different geographies have told us time and again that the IVIX platform is a game-changer,” said Matan Fattal, CEO and co-founder of IVIX. “Our ability to scale combined with our accuracy rate that exceeds 98 percent is transforming authorities’ ability to deter tax evasion, increase compliance and level the playing field.”
Sarit Firon, a managing partner at Team8 Capital, said that was no other similar company in this specific industry with a “purpose-built, tech-led platform designed to illuminate the shadow economy.”
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“IVIX’s tailored algorithms and collection capabilities allow tax authorities to automatically detect an entity’s activities to ensure accurate assessment of tax liability,” she added in a statement.
IVIX’s platform is already in use in several Organization for Economic Co-operation and Development (OECD) countries, the company indicated, where the platform discovered a number of occurrences of tax evasion thus far. These include events in industries where almost 50 percent of businesses weren’t reporting income, all while complying with strict global standards for security, confidentiality, and privacy.
“IVIX is filling a necessary gap in tax administration data collection and analytics,” said Don Fort, an adviser to IVIX who previously served as chief of the US Internal Revenue Service’s Criminal Investigation Division. “Using public information to specifically hone in on the shadow economy is an essential element of using data analytics to combat tax non-compliance at the federal, state, local and international level.”
The company’s founders, Fattal and Doron Passov, have a rich background in cybersecurity and intelligence. Fattal is the co-founder and former CEO of Silverfort, a leading cybersecurity company, and is a veteran of the Israeli military’s elite 8200 Intelligence Corps unit. Passov was previously a senior product manager at Gita Technologies and a cybersecurity consultant at industrial cybersecurity firm Claroty (also a Team8 portfolio company).
IVIX is a “graduate” of the AI for Good program in Israel, which aims to guide growing startups toward making a positive social impact.