StarZero All shows Try the podcast clipper →

Aug 5, 2021 · 22m · top-founders

Ardius Finds $500m in Tax Credits for Startups, Exits to Gusto

Josh Lee · 14m spoken Nathan Latka · 5m spoken
0:00 / 0:00

gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions

In this interview with Nathan Latka, Ardius founder Josh Lee breaks down how his company automated R&D tax credits for startups, identifying $500 million in credits with only $1.2 million in capital raised before being acquired by Gusto.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 28.8% of the talking time here. How this is scored →

Nathan as informed peer 4.9 Guest teaching 2.6 Guest disagreement 0.9 Nathan pushing back 2.4
05100:0010:0020:004:05–6:37 · Nathan as informed peer 5/10 Securing Institutional Backing from Mucker Capital Latka demonstrates ecosystem knowledge by identifying Mucker Capital's portfolio companies and accelerator peers like Alex Canter at Ordermark. The exchange is highly collaborative and conversational.6:37–9:19 · Nathan as informed peer 5/10 Pricing Mechanics and Reaching Massive Tax Credit Milestones Latka presses Josh on Ardius' cumulative numbers, insisting that passing the half-billion dollar milestone in tax credits is a crucial metric a founder must track closely.9:20–11:20 · Nathan as informed peer 5/10 Fundraising Strategy and Capital Efficiency in Tax Tech Latka drills into the round dynamics, confirming the total capital raised via convertible notes and comparing Ardius' capital efficiency against competitors raising large growth rounds.11:20–14:22 · Nathan as informed peer 4/10 Engineering Infrastructure and Automating the Internal Revenue Code Josh breaks down how software can programmatically map changes in the Internal Revenue Code to digital footprints like payroll and accounting data. The segment includes a brief mid-roll sponsor break.14:25–17:06 · Nathan as informed peer 6/10 Revenue Realization Mechanics and Payroll Tax Offsets Latka attempts back-of-the-envelope revenue math assuming an upfront 10% take on $500M, prompting Josh to school him on timing differences and quarterly payroll tax offset limitations for startups.17:07–22:11 · Nathan as informed peer 5/10 The Strategic Acquisition by Gusto vs. Series A Funding Josh discusses weighing a $10M Series A at high valuations against Gusto's acquisition offer. Latka probes the exit dynamics before transitioning into the Famous Five closing questions.22:11–22:44 · Nathan as informed peer 4/10 Interview Conclusion and Episode Summary Latka delivers a concise outro monologue summarizing Ardius' trajectory from its 2018 inception to acquisition by Gusto.4:05–6:37 · Guest teaching 1/10 Securing Institutional Backing from Mucker Capital Latka demonstrates ecosystem knowledge by identifying Mucker Capital's portfolio companies and accelerator peers like Alex Canter at Ordermark. The exchange is highly collaborative and conversational.6:37–9:19 · Guest teaching 2/10 Pricing Mechanics and Reaching Massive Tax Credit Milestones Latka presses Josh on Ardius' cumulative numbers, insisting that passing the half-billion dollar milestone in tax credits is a crucial metric a founder must track closely.9:20–11:20 · Guest teaching 2/10 Fundraising Strategy and Capital Efficiency in Tax Tech Latka drills into the round dynamics, confirming the total capital raised via convertible notes and comparing Ardius' capital efficiency against competitors raising large growth rounds.11:20–14:22 · Guest teaching 4/10 Engineering Infrastructure and Automating the Internal Revenue Code Josh breaks down how software can programmatically map changes in the Internal Revenue Code to digital footprints like payroll and accounting data. The segment includes a brief mid-roll sponsor break.14:25–17:06 · Guest teaching 7/10 Revenue Realization Mechanics and Payroll Tax Offsets Latka attempts back-of-the-envelope revenue math assuming an upfront 10% take on $500M, prompting Josh to school him on timing differences and quarterly payroll tax offset limitations for startups.17:07–22:11 · Guest teaching 2/10 The Strategic Acquisition by Gusto vs. Series A Funding Josh discusses weighing a $10M Series A at high valuations against Gusto's acquisition offer. Latka probes the exit dynamics before transitioning into the Famous Five closing questions.22:11–22:44 · Guest teaching 0/10 Interview Conclusion and Episode Summary Latka delivers a concise outro monologue summarizing Ardius' trajectory from its 2018 inception to acquisition by Gusto.4:05–6:37 · Guest disagreement 0/10 Securing Institutional Backing from Mucker Capital Latka demonstrates ecosystem knowledge by identifying Mucker Capital's portfolio companies and accelerator peers like Alex Canter at Ordermark. The exchange is highly collaborative and conversational.6:37–9:19 · Guest disagreement 1/10 Pricing Mechanics and Reaching Massive Tax Credit Milestones Latka presses Josh on Ardius' cumulative numbers, insisting that passing the half-billion dollar milestone in tax credits is a crucial metric a founder must track closely.9:20–11:20 · Guest disagreement 1/10 Fundraising Strategy and Capital Efficiency in Tax Tech Latka drills into the round dynamics, confirming the total capital raised via convertible notes and comparing Ardius' capital efficiency against competitors raising large growth rounds.11:20–14:22 · Guest disagreement 0/10 Engineering Infrastructure and Automating the Internal Revenue Code Josh breaks down how software can programmatically map changes in the Internal Revenue Code to digital footprints like payroll and accounting data. The segment includes a brief mid-roll sponsor break.14:25–17:06 · Guest disagreement 2/10 Revenue Realization Mechanics and Payroll Tax Offsets Latka attempts back-of-the-envelope revenue math assuming an upfront 10% take on $500M, prompting Josh to school him on timing differences and quarterly payroll tax offset limitations for startups.17:07–22:11 · Guest disagreement 2/10 The Strategic Acquisition by Gusto vs. Series A Funding Josh discusses weighing a $10M Series A at high valuations against Gusto's acquisition offer. Latka probes the exit dynamics before transitioning into the Famous Five closing questions.22:11–22:44 · Guest disagreement 0/10 Interview Conclusion and Episode Summary Latka delivers a concise outro monologue summarizing Ardius' trajectory from its 2018 inception to acquisition by Gusto.4:05–6:37 · Nathan pushing back 1/10 Securing Institutional Backing from Mucker Capital Latka demonstrates ecosystem knowledge by identifying Mucker Capital's portfolio companies and accelerator peers like Alex Canter at Ordermark. The exchange is highly collaborative and conversational.6:37–9:19 · Nathan pushing back 5/10 Pricing Mechanics and Reaching Massive Tax Credit Milestones Latka presses Josh on Ardius' cumulative numbers, insisting that passing the half-billion dollar milestone in tax credits is a crucial metric a founder must track closely.9:20–11:20 · Nathan pushing back 2/10 Fundraising Strategy and Capital Efficiency in Tax Tech Latka drills into the round dynamics, confirming the total capital raised via convertible notes and comparing Ardius' capital efficiency against competitors raising large growth rounds.11:20–14:22 · Nathan pushing back 1/10 Engineering Infrastructure and Automating the Internal Revenue Code Josh breaks down how software can programmatically map changes in the Internal Revenue Code to digital footprints like payroll and accounting data. The segment includes a brief mid-roll sponsor break.14:25–17:06 · Nathan pushing back 5/10 Revenue Realization Mechanics and Payroll Tax Offsets Latka attempts back-of-the-envelope revenue math assuming an upfront 10% take on $500M, prompting Josh to school him on timing differences and quarterly payroll tax offset limitations for startups.17:07–22:11 · Nathan pushing back 3/10 The Strategic Acquisition by Gusto vs. Series A Funding Josh discusses weighing a $10M Series A at high valuations against Gusto's acquisition offer. Latka probes the exit dynamics before transitioning into the Famous Five closing questions.22:11–22:44 · Nathan pushing back 0/10 Interview Conclusion and Episode Summary Latka delivers a concise outro monologue summarizing Ardius' trajectory from its 2018 inception to acquisition by Gusto.

speaking balance: gold is Nathan, purple is the guest (3 minute bins)

0:00 · Nathan 58.2% · guest 41.8%0:00 · Nathan 58.2% · guest 41.8%3:00 · Nathan 11.1% · guest 88.9%3:00 · Nathan 11.1% · guest 88.9%6:00 · Nathan 12.4% · guest 87.6%6:00 · Nathan 12.4% · guest 87.6%9:00 · Nathan 13.6% · guest 86.4%9:00 · Nathan 13.6% · guest 86.4%12:00 · Nathan 62.7% · guest 37.3%12:00 · Nathan 62.7% · guest 37.3%15:00 · Nathan 17.4% · guest 82.6%15:00 · Nathan 17.4% · guest 82.6%18:00 · Nathan 17.1% · guest 82.9%18:00 · Nathan 17.1% · guest 82.9%21:00 · Nathan 41.7% · guest 58.3%21:00 · Nathan 41.7% · guest 58.3%
Sharpest disagreement ▶ 18:27 Josh rejects premise of playing term sheets against Gusto

Josh politely rejects Latka's suggestion that they used competing high-valuation VC term sheets to squeeze Gusto on purchase price, emphasizing their clean cap table.

 Hardest push from Nathan ▶ 8:50 Host pushes guest to know total credits generated

Latka calls out Josh for not having the exact lifetime tax savings number immediately on hand, declaring it an essential benchmark for the company.

 Biggest teaching moment ▶ 15:23 Josh educates host on payroll tax drawdown schedules

Josh corrects Latka's revenue assumptions by clarifying that pre-revenue startups cannot claim credits upfront and must burn through them gradually via quarterly payroll tax offsets.

 Nathan holds their own ▶ 14:28 Latka calculates implied top-line cumulative revenue

Latka applies Josh's stated take-rate range against the $500M credit volume to pressure-test the startup's historical top-line revenue realization.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Securing Institutional Backing from Mucker Capital 5101 Latka demonstrates ecosystem knowledge by identifying Mucker Capital's portfolio companies and accelerator peers like Alex Canter at Ordermark. The exchange is highly collaborative and conversational.
Pricing Mechanics and Reaching Massive Tax Credit Milestones 5215 Latka presses Josh on Ardius' cumulative numbers, insisting that passing the half-billion dollar milestone in tax credits is a crucial metric a founder must track closely.
Fundraising Strategy and Capital Efficiency in Tax Tech 5212 Latka drills into the round dynamics, confirming the total capital raised via convertible notes and comparing Ardius' capital efficiency against competitors raising large growth rounds.
Engineering Infrastructure and Automating the Internal Revenue Code 4401 Josh breaks down how software can programmatically map changes in the Internal Revenue Code to digital footprints like payroll and accounting data. The segment includes a brief mid-roll sponsor break.
Revenue Realization Mechanics and Payroll Tax Offsets 6725 Latka attempts back-of-the-envelope revenue math assuming an upfront 10% take on $500M, prompting Josh to school him on timing differences and quarterly payroll tax offset limitations for startups.
The Strategic Acquisition by Gusto vs. Series A Funding 5223 Josh discusses weighing a $10M Series A at high valuations against Gusto's acquisition offer. Latka probes the exit dynamics before transitioning into the Famous Five closing questions.
Interview Conclusion and Episode Summary 4000 Latka delivers a concise outro monologue summarizing Ardius' trajectory from its 2018 inception to acquisition by Gusto.

Statements from this episode (14)

Assertion Contradicted
Ardius was the first M&A acquisition completed by Gusto
“And he was the first M&A deal that Gusto did, which we'll talk about.”
Nathan Latka Aug 5, 2021 ▶ 1:50
Assertion Not checkable as stated
Big Four accounting firms are too expensive for early-stage startups
“And so we actually took them to my former big four and they couldn't service us. We were just too small. Some of our companies were pre-revenue and, you know, the, You know, the labor intensity and the bill rates were just too high for the startups to actually…”
Josh Lee Aug 5, 2021 ▶ 3:07
Disclosure
Mucker Capital invested $200,000 in Ardius through its accelerator program
“They have an accelerator program, so that check size was roughly about 200,000.”
Josh Lee Aug 5, 2021 ▶ 5:34
Assertion Not checkable as stated
Ardius charged 10% to 30% of recovered tax savings as success fees
“Right now we're averaging anywhere from 10 to about 30.”
Josh Lee Aug 5, 2021 ▶ 6:41
Assertion Not checkable as stated
Ardius surpassed $10 million in cumulative client tax savings in 2019
“Yeah. For tax savings. Yeah. I mean, we had companies that came to us that were in the three, four million dollar range.”
Josh Lee Aug 5, 2021 ▶ 8:08
Assertion Not checkable as stated
Ardius secured up to $4 million in tax credits for one client
“They were in manufacturing had never thought they would qualify for the life of them. And we were actually able to go back you know, four or five years, right. Because it is a refundable credit. So we went back four or five years and it, Culminated to about, y…”
Josh Lee Aug 5, 2021 ▶ 8:22
Assertion Not checkable as stated
Ardius was profitable from day one
“We were always profitable from day one.”
Josh Lee Aug 5, 2021 ▶ 9:38
Assertion Supported
Ardius competitors raised capital at valuations up to $500 million
“I mean, we have our, like I said, competitors out there raising it like, you know, half a billion dollar valuations, right? Or in the hundreds of millions.”
Josh Lee Aug 5, 2021 ▶ 10:44
Assertion Partly supported
Ardius had roughly 15 employees prior to its Gusto acquisition
“We were at roughly 15.”
Josh Lee Aug 5, 2021 ▶ 11:26
Insight
Constant regulatory changes make the tax code ideal for software automation
“And so I think tax is one of those areas that, that we feel are most conducive for software, right? Because the tax code, internal revenue code changes all the time. And it actually makes a lot of sense to, you know, to change and program that at the top level…”
Josh Lee Aug 5, 2021 ▶ 11:47
Assertion Not checkable as stated
Ardius neared a $1M annual run rate before its Gusto acquisition
“We were close. Yeah.”
Josh Lee Aug 5, 2021 ▶ 17:04
Disclosure
Ardius targeted a $10M Series A before exiting to Gusto
“Our target was somewhere close to probably about 10 was what we were thinking about raising ten million.”
Josh Lee Aug 5, 2021 ▶ 18:06
Assertion Not checkable as stated
Ardius received Series A offers at $50M to $100M+ valuations
“We got offers anywhere at a fifty million, a hundred million. I mean, even one that was above that as well.”
Josh Lee Aug 5, 2021 ▶ 18:15
Assertion Not checkable as stated
Ardius had no outside equity on its cap table at acquisition
“I mean, again, there was nobody that was literally on our cap table at the time, right? We had a convertible note at best.”
Josh Lee Aug 5, 2021 ▶ 18:37
Made with StarZero

Turn any episode into a week of clips.

This entire site, over 2,600 episodes transcribed, diarized, checked and made playable, runs on the StarZero media pipeline. Drop in your own episode and the podcast clipper finds the moments worth sharing, cuts them, captions them, and reframes them for every feed.

Try the podcast clipper Learn more