Venture capital firm Battery Ventures said Wednesday that it has invested $20 million in sales tax automation provider Avalara.

The cloud-based sales tax company was initially funded by angel investors, including the Benaroya Company and Pioneer Venture Partners in 2004. More recently, it received $21 million in additional funding last year from existing investors and Sageview Capital (see Avalara Grows with New Staff and Financing).

Battery Ventures, which has offices in Boston, Silicon Valley and Israel, has financed a number of prominent companies, including Akamai Technologies, Angie’s List, Groupon and
MetroPCS. Avalara’s Software as a Service-based transactional tax compliance system targets the needs of small to mid-sized businesses. It will be joining other SaaS-based technology companies in Battery’s current portfolio, including Brightree, Coupa Software, Delphix, Kontagent, Marketo, Opscode, SingleHop, Sprinklr, Wayfair and Zerto.

“Avalara exemplifies what we look for in companies as investors: a practical solution to a pressing problem,” said Battery Ventures partner Chelsea Stoner in a statement. “The increasing complexity of sales and use tax regulation has amplified the need for Avalara’s SaaS-based offering, as it’s truly a pain point businesses can’t afford to ignore. Avalara’s technology and integration capabilities, along with their impressive customer base, have powered them into the leadership position in this billion dollar market. We believe Avalara has massive potential and we look forward to working with the team to achieve it.”

In conjunction with Battery’s funding, Chelsea will join Avalara’s board of directors.

“Avalara has grown significantly over the past few years, and we think the market for our SaaS solution will soon mirror that of payroll automation,” said Avalara CEO Scott McFarlane. “While we were not actively looking for funding, we are confident Battery’s investment will help Avalara quickly tap the huge opportunity we see ahead of us. Their impressive record and solid understanding of the SaaS business model make them the right partner to help build the next phase of our business and create a world-class company.”

Avalara currently serves tens of thousands of registered users globally and calculates value-added taxes and sales and use taxes on nearly 1 billion transactions per year. It also manages more than 1.5 million exemption certificates, files approximately 500,000 returns, and remits nearly $10 billion in sales and use tax collections per year.

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