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New EU customs regulations, plus the UK’s exit from the European Union, have created greater obstacles for exporting both into and out of the EU. To overcome those challenges, Eurora, an Estonian firm, has developed a platform to make sure regulations don’t delay product deliveries, all duties are paid on time and correctly, and vendors, compliance officers, and logistics firms can get goods from Point A to Point B efficiently.
The firm recently raised $40 million in its Series A round, a cash coffer that will double its headcount and reach even more customers with its AI-backed e-commerce compliance platform. And while the EU has been a core market, it is eager to see its systems adopted more widely to solve customs-related logistics issues anywhere.
Connected Capital of Amsterdam led the recent financing round, as well as Change Ventures and Equity United, both based in the Baltics, and Founder and CEO Marko Lastik. The latter two VCs contributed to Eurora’s $3 million seed round last year. The company was founded in 2018.
“We want to increase our presence in the US, UK, and Middle East markets,” says Alexander Maasik, head of marketing at the Tallinn-headquartered company, of the firm’s current plans.
Expanding headcount is also a priority, he adds. When Maasik joined Eurora in January 2021, he was employee number 38. Today, the company employs more than 100 and maintains offices in Shanghai, Singapore, Shenzhen, Amsterdam, London, Delhi, and Dubai. Eurora will add 100 more people this year. He says that most new hires will be in product development and data science.
For all of these people and from all of these locations, the goal will be to reach more customers, both e-commerce firms and logistics providers, to streamline their shipping of goods into the European market. The US and UK are among the biggest exporters to the EU, Maasik notes. Companies in those countries increasingly face issues related to declaring products and timely deliveries due to Brexit and new EU customs regulations.
Feeling acquisitive
Eurora is also feeling acquisitive too and may use its new financing to snatch up smaller companies and technologies that might complement its core offering and help it reach its goals.
“We don’t want to just be a software platform that deals with one issue,” underscores Maasik. “We want to manage the entire supply chain.”
Eurora’s relatively fast expansion rate has coincided with several events and trends that led its founders to establish the company. One is undoubtedly the increased adoption of e-commerce to sell and buy goods, a trend that spiked during the COVID-19 pandemic. There has also been the descent of a regulatory barrier between the UK and the European Union following Brexit and, perhaps most significantly, new EU legislation that, among other things, ended a €22 value-added tax exemption on goods arriving in the EU when it came into force last July, meaning that all goods must be declared.
This has created what could be called a challenge for e-commerce firms, which now have to wrangle with sales tax codes, item classification schemes, and issues related to potential noncompliance and delays should they get anything incorrect.
Making sure delays do not happen
Eurora’s offering concept is to make sure those delays don’t happen. The firm has developed a software platform with input from researchers at Tallinn University of Technology, University of Tartu spinout StatLab, and Estonia’s Software Technology and Applications Competence Centre.
The resulting platform automates tax, compliance, and custom services, assigns e-commerce products the correct harmonized system (HS) tariff code, calculates the applicable value-added tax and duties and then creates electronic declarations for EU duties and taxes. The tool can be embedded into existing software platforms in e-commerce and logistics firms via APIs to ensure that the duties paid are correct and the relevant declarations are made.
“Everything happens automatically,” notes Maasik.
Clients from Asia to the Middle East
The firm has won over clients since it rolled out its product last year, including major players in Asian e-commerce such as JD.com, Yanwen, and Topyou. As Maasik notes, Eurora wants to gain similar accounts in the UK, US, and the Middle East.
This has been an undertaking, as every shipping means requires the calculation of different fees and duties. An e-commerce seller moving goods from China to Finland, Maasik notes, will pay different taxes than a seller in Taiwan shipping the same goods to Estonia.
“One by one, these automation services were developed,” says Maasik. “Now we can say it covers all cross-border compliances that people and companies face when shipping goods from one country to another,” he adds. And while it is still mainly used for goods entering the EU, it finds obvious use in any market worldwide. “In theory, this same system can be applied for shipping from anywhere to anywhere,” says Maasik
Eurora will also use its new funds to continue improving its software, though Maasik declined to divulge the details. “We will continue innovation,” he promises, “for our e-commerce and logistics customers.”
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