How AI Is Moving R&D Tax Credits From The Rearview Mirror To The Cutting Edge 

With so much competition in the tech and venture capital spaces, companies are always looking for a way to maximize returns on their innovations and investments. Whether it’s a new platform, unique product, or breakthrough study, innovation is essential to growth. The trouble is, those investments don’t always yield returns.

I sat down with Alok Tyagi, CEO of Vancouver-based Boast, to discuss how AI-powered platforms like Boast can support small- to medium-sized businesses by bringing in non-dilutive funding through R&D tax credits.

So many people here in Vancouver have heard of Boast, yet you’ve been with the company for just over a year now. Why did you join Boast?

AT: I’m a product guy who became a business guy. All my life, it’s always been about unlocking the true potential of R&D, and I’ve been very fortunate that I worked for companies like Sage, Oracle, and RealPage. These are big brands that emerged from small startups, and that’s how I came to know the team at Radian Capital. Radian is one of the investors in Boast. I met (co-founders) Alex (Popa) and Lloyed (Lobo), they started an organization that was solving the simple question of ‘how do you unlock the true potential of R&D?’ Unlocking the true potential of R&D across thousands of companies? That’s my life’s passion! So that was a natural fit.

When you were working for some of those big companies on the product side, were you always involved in R&D claims? Were you always submitting your work and getting reimbursed for it?

AT: Almost every company uses R&D investment. Either you do it as a tax claim, or you do it as depreciation, or you get a payroll offset. From a CFO perspective, you’re always looking for how investment dollars can have a meaningful financial outcome. So they all looked for that.

We have a running ticker at Boast that tracks the hundreds of millions of dollars we have credited back to companies. Pretty quickly you realize, especially in the early stage and the entrepreneurial space, that we’re actually extending their runway. And when I came on board last year, I spoke to about 40 customers as part of my onboarding. And many of them said, “If it wasn’t for Boast, I don’t know whether we would still exist. I got goosebumps. I don’t know if I’ll say ourselves just as the SR&ED company. I see ourselves more as a company that provides immediate access to the capital. And which is also non-dilutive of capital and SR&ED is one of the things we do. We have also added financing on top of it. So if you are supposed to get $1 back, you can get 75 cents today, which makes it far more from it from a liquidity perspective. And if you’re looking for somebody, especially in an environment like this when it comes far more compelling. And over the years to the point, I think where you’re taking the discussion, the secret sauce is the platform. We don’t have any more like tens of hundreds of customers. You’re talking about thousands plus customers and when you’re doing claims for those many customers are on a very tight deadline. If you don’t have a great platform, you cannot deliver it on a very repeated basis, very consistent basis. And that’s what makes our secret sauce come together.

There are many technology companies, but they only have technical data. What we do at Boast, and you may have some perspective because you have spoken with Lloyed and others, is that not only do we have technical data, but we also have payroll data, and accounting data. We can smash them together in speed, R&D business sense. There are not a lot of companies with a big R&D sense. We speak R&D in dollars and cents.

Are claims all automated now? Do you have accountants looking at each file, or is it simply companies inputting their data, pressing a button, and then waiting for their check?

AT: From a customer perspective, it’s as simple as that. You provide your payroll, accounting, and technical data. We conduct one interview for maybe two to four hours. That’s it. From a customer perspective, you are done. Behind the scenes, we have a platform that does the work, but more importantly, we have experts who really know about SR&ED  to produce the data, technical forms, and reports that go to that account. It’s a technology-enabled service because the service part is what creates peace of mind when customers get audited. Our experts are the ones who go and defend the claims because we own it, and we know exactly what we are attempting to complete in the process.

So the company gets audited, and the audit claim goes back to Boast? And you guys obviously don’t guarantee things, but you’re pretty close to guaranteeing?

AT: Our audit success rate is the highest in the industry.

What percentage of SR&ED claims in Canada get audited?

AT: The stats I’ve seen are something like 25 percent. Because in Canada you can get up to 64 cents on the dollar credited through SR&ED.

You all most recently raised $30 million, and then you have a new $100 million credit facility. Are you raising more money soon? Or is that plenty of money for you?

AT: We separate the investing cycles from the operating cycle. From an operating perspective, we are a high-growth business and are already in a very sustainable growth mode. Now, we really need to look at how do we grow into a multiple-product business or multiple-geography business, or a multiple-scale business.

Back when Boast was renamed ‘.ai’ it was weird and advanced. Now it is becoming very popular. Do you view any of the AI options outside of what you’re working on as a threat to your business?

AT: We talk a lot about that internally. Things change slowly before things start to change fast, and we are leveraging a lot of AI technologies alongside the expert service component. At the end of the day, you need a human.

What percentage of your employees are working on the technical stack? Or on AI and building software runs?

AT: Like any other business, our performance depends on investing significantly in R&D. So it’s always north of 20 percent.

And did I hear that you are all virtual? That there are no offices in any cities?

AT: We work. This is life. We go everywhere. Whenever the talent is available.

I think at some point, the technology, whether it be AI-machine learning, will expand your market to more companies and will have the ability to move to more companies. Do you think it will change the way that venture capitalists invest too?

AT: Almost every aspect of life is going to change. Tomorrow with these prediction engines, VCs and companies alike can invest more wisely, and in doing so will be far more successful.

So what has changed since you joined Boast?

AT: I think of our service offerings as a three-legged stool. One leg is our passion to empower entrepreneurs. Empower their vision, empower the change agent, and empower the dreamers of the world to bring world-changing innovation into the marketplace. Money is just one aspect of what we do.

And our platform already has a lot of intelligence and prediction engines and AI-enabled technologies. We enable similar post-intelligence and prediction engines because today when we do SR&ED, it’s mostly looking in the rearview mirror. What did you do last year? How did you capitalize on the R&D you do now? It’s more about whether can we enable them with this intelligence and validation engine to be more forward-looking so that you can look ahead and know how you should go about investing your R&D dollars for better outcomes. Now, our three-legged stool consists of Boast capital, the passionate empowerment, as well as Boast intelligence, and the Boast prediction engine.  This enables entrepreneurs to be more forward-looking rather than just taking a rearview approach.