Apr 16, 2026
Growth investor Sumeru Equity Partners acquired artificial intelligence-powered tax technology company K1x, looking to capitalize on private markets’ explosive growth and AI’s ability to drive big payoffs.
San Mateo, Calif.-based Sumeru led a $175 million investment in K1x, which spun out from accounting firm Crowe in 2022. Edison Partners, an earlier investor, also participated, while venture-capital firm Mudita Venture Partners exited its investment as part of this transaction.
Private markets firms, once largely focused on institutional investors, are making a big push to attract everyday investors. Just last month, the Trump administration proposed rules aimed at opening 401(k)s and similar retirement plans to private equity and private credit while mitigating litigation risks.
This shift, seen as a windfall for private equity and others, is expected to drive an explosion in the number of K-1 tax forms. Partnerships and other pass-through entities use K-1s to show a partner’s share of the profit or loss, for example. The individual needs that information to file their tax returns.
While K1x works with a variety of tax documents, K-1 tax forms are notorious for being manually intensive, running in some cases in the hundreds of pages with footnotes and other “non-structured” data that require interpretation to figure out where to put the information in a personal tax return, Chief Executive John LaMancuso said.
The burden is “a structural problem that the industry has been facing for a while and it’s compounded by these really big secular trends,” said Kyle Ryland, the Sumeru managing partner who led the deal.
And those K-1 tax forms also tend to be delayed, often not arriving until early to mid-September, which means that individual investors often have to estimate tax payments, LaMancuso said.
The company’s AI-powered system takes “a K-1 that would take hours and hours and hours for a tax professional to understand, digest, enter it into a spreadsheet” and cuts the process down to a fraction of the time, lowering costs and risk along the way, LaMancuso said, adding that his company can automate the creation of K-1s as well.
Morristown, N.J.-based K1x works with tax professionals, family offices, university endowments and others that process large volumes of tax forms.
In all, some 40,000 organizations used K1x in 2025, up about 55% from the year earlier, the company said.
Annual recurring revenue rose by about 50% in 2025, according to the company’s website. It averaged roughly 65% annual revenue growth over the three most recent years.
A popular metric for software-as-a-service companies is the “Rule of 40,” which holds that revenue growth and profit margin should add up to at least 40%. Ryland and LaMancuso said they are looking at K1x as a Rule of 50 company.
Edison initially backed K1x in 2022, leading a $15 million investment, and then again in 2024 with $20 million more.
Automation alone made K1x an attractive investment, Edison Managing Partner Chris Sugden said, citing the laborious, manual process of extracting data from the K-1 tax form. AI is now turbocharging the company’s offerings, he said.
“There’s still a lot of ‘wood to chop’ from a growth opportunity,” Sugden said, adding that AI is driving a major shift in software pricing, away from models based on the number of individual users to consumption-based metrics, which bodes well for companies like K1x.
Write to Maria Armental at maria.armental@wsj.com.
