For fast-growing tech companies, navigating SR&ED tax credits can mean the difference between extending runway by quarters or getting bogged down in painful audits that consume dozens of hours. The key differentiator? Finding a technical partner who can translate engineering innovation into tax language without requiring extensive hand-holding.
Tyler Kelloway, Director of Finance at CoLab Software, joins the latest What The Tech podcast to share his journey from Big Four accounting to wearing every hat at a Y Combinator startup, and why switching to a specialized SR&ED provider saved significant development time while growing their claims year over year.
From Big Four Bookkeeping to Series B
Kelloway’s path to CoLab began in 2018 when the company had just under 10 employees and needed general bookkeeping help. Working at a Big Four accounting firm at the time, he took on CoLab as a side project—10 to 15 hours per week in the evenings handling what was officially called “bookkeeping” but actually encompassed much more.
“As you can imagine, a tech startup, you wear many hats early,” Kelloway explains. “I took the bookkeeping, financial operations. There were even days where I was picking up lunch.”
That flexibility proved valuable as both Kelloway and CoLab grew. He quickly left the Big Four firm to commit fully, and the company’s trajectory accelerated: Y Combinator acceptance in 2019, Series A in 2021, Series B by 2024. Today, CoLab employs about 150 people globally and is firmly revenue-generating.
Solving the Design Review Problem
When Kelloway first joined CoLab, he experienced an “aha moment” about the engineering industry: “How doesn’t this exist? How aren’t there competitors? How are engineers still working the way they work?”
CoLab developed a design engagement system that connects all the disconnected aspects of complex product design reviews. Without such a system, critical information gets scattered across screenshots, emails, Excel spreadsheets, Slack messages, and individual repositories, creating a snowballing effect where issues identified during development never get resolved by production time.
“The more complex the product gets, the more of these disconnected redundancies occur,” Kelloway notes. CoLab’s platform allows teams to upload CAD files, collaborate with suppliers, and work toward final designs in one centralized system.
In July, they launched Auto Review, an AI agent that handles administrative and redundant tasks in the background, allowing engineers to focus on critical decision-making rather than process management.
While no direct competitors exist in their space, CoLab faces indirect competition from tools that tackle subsets of their functionality (ie. early design tools, issue tracking systems) but nothing that provides their comprehensive approach.
The Painful Reality of Early SR&ED Claims
Kelloway’s SR&ED journey began around 2018-2019 after hearing about the program at a local founder meetup. Like many finance professionals, he’d avoided this “not the biggest sexiest area of study” throughout his education and career.
That first claim proved brutally educational. Beyond the challenge of educating internal teams about SR&ED and working with experts while not being an expert yourself, CoLab faced an audit in their first year.
“I think it was around 12 hours of conversation,” Kelloway recalls. “First four went amazing. We went, we broke for lunch. We actually went out and bought lunch because the audit went so well.”
Then everything changed. The auditor got caught up on a couple of words in one response and attempted to eliminate the entire SR&ED claim based on that language. The fundamental issue: The auditor didn’t understand the technology CoLab had built, and therefore couldn’t grasp the technological uncertainties they were claiming.
“The 12-hour audit could have been done in two if that understanding was there,” Kelloway explains. “The challenging part was trying to communicate in a tax auditor’s world what a new technology that you cannot compare to a competitor does so that they can understand it.”
Despite the claim’s small magnitude, which made CoLab consider scrapping the audit entirely, they persevered because it represented all their foundational work and would set a precedent going forward. They achieved 70-80% approval, which felt like a huge win given the pain involved.
The Difference Technical Expertise Makes
CoLab’s 2021 audit presented a stark contrast. The auditor actually understood software development and tech, making the process “a lot cleaner.” Even better, the auditor helped them reframe their language for future claims to make uncertainties “sound a little more SR&ED-able.” That audit achieved 80-90% approval and felt efficient for everyone involved.
The experience crystallized an important insight: “A 10-person company doesn’t run very cleanly compared to a company of 200. The amount of hours was many, but we’ve gotten it down surprisingly. The bigger the company has gotten, the less hours we’ve spent on SR&ED and the higher our claims have actually been.”
Running a Clean RFP Process
After working with the same accounting firm and Big Four provider, CoLab went to market to evaluate whether they were getting the best service at market rates. They looked at three Big Four firms and two niche SR&ED shops, considering Boast among the specialized providers.
The RFP included 15-20 criteria, but everything ultimately collapsed into one critical question: “Are they equipped to write this entire claim without us? And if they write this entire claim without us, will we have to go over and rewrite the claim?”
The decisive factor was the technical partner. During initial conversations with Boast, the technical writer understood CoLab’s elevator pitch after the first call. “He said the elevator pitch back to CoLab, and he understood it,” Kelloway remembers. “There’s always iterations, but it’s a matter of should we frame it like this to reference this? It’s not ‘this doesn’t make any sense, we need to reshape this because it doesn’t relate to anything we’ve actually done.'”
This distinction matters because you can’t simply document how you developed a product and call it SR&ED language. “You need to make it seem like you’re accomplishing your technological uncertainty,” Kelloway explains. “And then it’ll also be reflective of what you actually did.”
The Value of Seamless Processes
Since switching to Boast, CoLab has seen claims grow steadily while reducing the time burden on their development teams. From 2017 to 2019, claims doubled annually. Between 2019 and 2021, they tripled one year, then grew 10-20% thereafter as the company matured.
“It has saved our development time more than anything,” Kelloway notes. “It saves significant amount of time on the technical side, just between the AI doing what it does with our data, grooming the report, and then it coming to us and being able to reference something we did in February in layman’s terms and how that translated over to the SR&ED claim.”
The onboarding process? Kelloway doesn’t even remember it being strenuous—and notes that if it had been, they probably wouldn’t have proceeded. That seamlessness reflects the ideal: a process that meets the market where it’s at without adding friction.
Strategic Impact Beyond Runway
In the early days, SR&ED funding primarily extended runway—crucial when you’re a 20-30 person company calculating exactly how many months you could survive if everything went wrong. But unlike other government funding programs that provide committed amounts paid out monthly based on spending, SR&ED delivers cash injections immediately upon approval.
“Early days, it was likely runway extenders, helped us offset costs on hiring,” Kelloway explains. “Later days, it pulled forward some of our roadmaps. If we thought we were gonna hire a team in Q4, we’d receive the SR&ED funding in Q2, we would’ve started hiring Q2 and pulled that forward at least a quarter or six weeks.”
That ability to accelerate plans rather than simply survive creates meaningful competitive advantages for growing companies.
The Honest Reference
When asked if he’d recommend Boast to others, Kelloway responds with characteristic candor: “I speak fairly candidly giving references. I gave you folks a reference for one of your prospects a couple weeks ago. I spoke very honest and openly.”
His approach: understand the prospect’s current state before making recommendations, so he can speak to the difference between where they are and what a future state might look like.
The verdict? “It has been great since we switched.”
For companies navigating SR&ED for the first time or frustrated with their current provider, Kelloway’s story offers a clear lesson: the technical partner matters more than anything else. Find someone who understands your technology well enough to translate it into tax language without requiring extensive rewrites, and SR&ED shifts from a painful time sink to a valuable funding source that accelerates your roadmap.
Talk to an expert from Boast AI today to learn how we help innovative companies like CoLab maximize SR&ED tax credits while minimizing the time burden on your technical teams.
