Simplicity has announced its latest private equity investment, taking an 18.8% stake in the parent company of two tax technology companies, Tax Traders Limited and its latest startup venture, Taxi Limited. The investment will primarily support the development of Taxi, a new startup that offers access to affordable working capital for businesses, backed by their provisional tax payments.

“We’re delighted to make this investment, which is designed to make our members sustainable returns and support good Kiwi businesses,” said Sam Stubbs, MD of Simplicity.  

Tax Traders, which started in 2012, is a tax pooling intermediary and works with accountants to provide taxpayers with more flexibility when paying provisional tax. The business has grown significantly over the last 10 years and is investing into its next venture – Taxi, which uses the same provisional tax framework to provide more affordable business funding.

According to co-founders of Taxi and Tax Traders, Josh Taylor and Nicola Taylor, securing capital to invest in Taxi is a critical part of scaling quickly.

“Taxi has the potential to have a huge impact for Kiwi businesses and New Zealand’s GDP, and we knew that securing an investment partner would mean we could scale quickly and see many more businesses benefitting faster,” says Nicola. 

However, the co-founders were very particular about who to bring on as an investor.

“We were very clear that we wanted a partner who shared a vision for this country and was interested in sustainable business results, rather than an investor who was solely focussed on a short-term financial return. 

“We are in business because we believe business can be a force for good and this requires a different approach to capital investment. In Simplicity, we found an investor whose values align with ours and who we knew would encourage us to make sustainable business decisions, in line with our DNA, not purely with a financial outcome,” says Nicola.

Kiwi businesses on average experience negative cash flow for four months of the year which leads to many challenges. Nicola cites research from NZIER^[1] who have calculated the new funding service offered by Taxi is projected to have a measurable impact on both individual business productivity and the economy as a whole.

NZIER’s economic modelling shows that even a conservative uptake of Taxi by New Zealand businesses could give them the ability to increase GDP by up to $900 million per year. Long-run, widespread use of Taxi would increase GDP by up to $10.8 billion or 2.7% annually – similar to the food and beverage manufacturing industry. Savings on overdraft costs alone could easily exceed $50 million annually.

“We’re incredibly excited to get Taxi on the go and in the hands of Kiwi businesses. Simplicity’s investment has been pivotal in enabling Tax Traders to gear up for this,” says Nicola. “We also know that the investment will ensure Tax Traders retains its status as the most preferred tax pool in New Zealand and continues to release smart tools for accountants to simplify the provisional tax process.”

Stubbs adds “The power of using our KiwiSaver and Investment Funds to gain exposure to private Kiwi companies is very exciting. We want to be supporting great businesses to grow over the long term, and we are finding no shortage of great people with great companies to invest in. Our passive equity provides the company with another funding option instead of taking on debt or selling a major equity stake.”

Simplicity’s private equity strategy is gathering momentum with its unique proposition – take minority and passive equity stakes in unlisted Kiwi companies across different industries and be there for the long term. The preferred private equity investment is between $5-10 million to support established small-to-mid size private enterprises which are the lifeblood of the New Zealand economy.

This investment marks Simplicity’s sixth private equity investment, and it joins a portfolio of other New Zealand businesses that includes Icehouse Ventures (management company), Quantifi Photonics, Reliable Foundations, Pure Food Co, and DataTorque.  

For more information on Simplicity, visit simplicity.kiwi
For more information on Taxi, visit gotaxi.co.nz