Tallinn-based Eurora Solutions today announced a $40m Series A, one of the largest to come out of Estonia, as it attempts to tackle ecommerce shipping issues caused by EU regulation changes.
The startup, founded in 2018, has created a machine learning-backed cross-border customs compliance platform. It might sound dry, but it’s increasingly important in making the world of ecommerce tick.
If Brexit has taught us anything it’s that customs declarations and moving goods across borders can be a nightmare. Add to that new EU trade rules which went into effect last July, and we could all be drowning in red tape soon.
“The number of different declarations, codes, reports, records and tax calculations required in the international shipping business is ever increasing,” says Marko Lastik, Eurora’s founder and CEO.
Red tape blues
Ecommerce, with its low value per package model, has become a victim of changing regulations in Europe. First Brexit threw up trade barriers between the UK and EU, and then, starting in July 2022, the EU removed its VAT exemption for imports worth under €22, with new trading regulations for goods coming in and out of the bloc gradually coming into effect.
Meanwhile, over the past decade global parcel shipping volumes have almost tripled, aided by the rapid rise in ecommerce.
Yrjö Ojasaar, a partner at Change Ventures, tells Sifted that Eurora wasn’t an obvious investment for the Tallinn-based VC fund last year, having spent two years developing very complex AI technology but with little sales at the time. However, after looking closer, Change Ventures led the startup’s July 2021 $3m seed round.
“We understood that this is what it takes to automatically and accurately from day one handle tens of thousands of transactions per hour for large Chinese clients like JD.com," he says.
Eurora’s software automates tax, compliance and customs services, assigning ecommerce products an appropriate HS code while calculating applicable VAT and duty amounts. It then automatically creates electronic declarations for EU duties and taxes.
The startup already has over 200 clients worldwide, and claims to be able to process 5,000 requests a second with up to a 96% accuracy. This latest funding will be used to expand operations into the UK, the US and the Middle East, with the team of 150 people set to double by the end of the year.
“We have seen a clear push from regulators to improve transparency and reporting for the increasing number of goods that enter through customs,” says Shaffy Röell, an investment manager at Amsterdam-based Connected Capital, which led this latest round, alongside existing investors like Change Ventures and Equity United.
“We believe that Eurora has built a truly unique AI/ML-based platform,” he adds.
Bringing in the big guns
Eurora recently brought on Anneli Aljas, the former vice president of finance at Bolt, as chief financial officer.
"I definitely believe that this is a new product which is scalable, and which can change the world,” Aljas tells Sifted, a bit ambitiously. “We do not need thousands of people to work with the products. It’s a product that’s scalable and which does not have the limitations related to how many employees you have or how much hardware you have.”
Aljas suggest that, going forward, the company could also be a good partner for local tax authorities, with the delays in implementing Brexit customs measures from the UK side a good example of where they could help.
“That delay is caused by the fact that they don’t have the systems ready, and and we know that it's not easy to do these systems,” she says. “By using our system we can really help them."