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Avalara CEO Scott McFarlane. Photo via Avalara
Avalara CEO Scott McFarlane. Photo via Avalara

This isn’t such a bad way to celebrate its 10th anniversary.

Avalara, the Bainbridge Island software company that helps organizations such as Crocs, WatchGuard Technologies and ANC Sports calculate and comply with taxes, has scored $100 million in fresh funding from investment powerhouse Warburg Pincus. It marks one of the largest investments to date in a Seattle area tech company, surpassed only by Juno Therapeutics which raised $310 million in two rounds over the course of the past 12 months.

“For me, this is really pretty exciting news,” said Avalara CEO Scott McFarlane in an interview with GeekWire. “The support in this investment from Warburg really validates our fundamental belief that sales tax compliance, sales tax calculation and sales tax automation, as we call it, is inevitable. This is no secret. The concept of doing sales tax manually in a digital world is just crazy. It will be automated.”

Avalara, with thousands of small and medium-sized business customers, wants to be the one to automate it.

avalaraThe massive funding round follows a $30 million round that Avalara secured in February from Battery Ventures and Sageview Capital. Total funding now stands at more than $200 million. The company employs close to 800 people, and it plans to keep growing with the new cash. McFarlane noted that he is looking to make good on the GeekWire award last year in which Avalara was named “Next Tech Titan,” including one heck of a memorable acceptance speech.

“We are putting this into growth initiatives. That’s where all of the money is going,” said McFarlane, adding that the company plans to make some new acquisitions and expand internationally with the new capital. McFarlane said that none of the money would go to cash out existing shareholders, and he declined to say whether Warbug now owns a majority of the company.

As part of the growth, Avalara recently secured a new 36,000 square-foot office space at 2nd and Spring in downtown Seattle. The company plans to consolidate two of its offices in Seattle (at Pier 55 and 1000 Second Avenue) at the new location next Spring, and it plans to retain, for now, its 30,000 square-foot headquarters on Bainbridge Island.

McFarlane, Jared Vogt and Rory Rawlings founded Avalara in 2004 as an online sales tax software company. Today, the company sells subscription software that automates compliance with all sorts of transactional taxes, including sales tax and value added tax. Avalara now tracks rates in 12,000 jurisdictions in over 150 countries.

Rory Rawlings of Avalara brought down the house at the 2014 GeekWire Awards.
Rory Rawlings of Avalara brought down the house at the 2014 GeekWire Awards with one high-energy speech.

In fact, some of the new money will be used to expand outside the U.S., with the company already operating offices in London, England and Pune, India. McFarlane said that less than five percent of revenues come from overseas, something he said likely will change in the coming years.

“You can’t be sales tax or transactional taxes in e-commerce and not have a portion of your business going around the world,” he said. “It is why we support over 150 countries today, and it is a growing part of what we do.”

As a result of the financing, Justin Sadrian of Warburg Pincus will join the board. Warburg, with $37 billion in assets under management, is no stranger to Seattle. It bankrolled a financing of salary and compensation report generator PayScale for up to $100 million in April, taking a majority stake in the 14-year-old firm. It also previously purchased The Cobalt Group, an automotive technology company in Seattle.

McFarlane declined to comment on whether the company considered an IPO, saying only that they are “always investigating all of our options.”

“This does not change anything we are doing from a strategic perspective,” said McFarlane of the new capital. “It is just what we felt we needed to do in order to grow as quickly and strategically as we could.”

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