Corporate spending simply cannot be a winner-take-all space – Techdoxx

Deepak Gupta February 6, 2022
Updated 2022/02/06 at 3:42 PM

Welcome to my new fintech-focused weekly column. I’ll be posting this every Sunday, so between posts, be sure to listen to the stock podcast and listen Alex Guilherme, Natasha Mascarenhas and i riff on all things startups! And if you want this to go straight to your inbox as soon as it turns into a newsletter (coming soon!), sign up. here.

Competition among corporate spend management startups is heating up. Here in the US, the major players include Brex, Ramp, Airbase and now, TripActions.

I’ve talked a lot with the founders of Brex and Ramp in the past, as well as with the person responsible for this segment within TripActions. It’s becoming increasingly clear to me that this is definitely not a winner-take-all industry.

In January, for example, Ramp co-founder Eric Glyman told me:

I I think sometimes people kind of criticize us and think maybe this is a card for tech companies and we have a lot, but most of our customers are not startups and they are not tech companies. One of our big customers is a potato farm that has been around since the 1940s and is only looking to modernize and automate many key processes. I have a lot of respect and I learn a lot from other people in our industry, but it’s a huge space.

The company also plans expand your offering to include more features, including bill payments.

Image credits: Ramp co-founders Karim Atiyeh and Eric Glyman

For its part, Brex started its life focused on offering credit cards aimed primarily at startups and SMEs. It now aims to serve as a “financial operating system” for its customers, starting with a premium SaaS service launched in 2021. Brex has also broadened the type of customer that serves, with co-CEO and co-founder Henrique Dubugras telling me in January that while it continues to serve startups or e-commerce companies that may be smaller businesses with higher growth, it is now adapting to serve medium to large companies that have different financial needs as they grow.

Late last year I spoke to Michael Sindicich, general manager of TripActions Liquid (the unit of the company that focuses on general expense management), and he told me that the company counts among its clients from small SMB companies – of about 200 employees – to large multi-global companies, including some Fortune companies. 500

He added: “I think one place that we focus a lot on is actually expanding globally, to be able to issue in different currencies, refund in multiple currencies, to really provide a true global solution.”

I haven’t personally spoken to Airbase’s Thejo Kote yet, but he told my colleague Alex Wilhelm last year that his company is more focused on the midsize customer. One thing is clear, all these companies want to offer more than corporate cards, and it’s probably safe to say that they’d all like to expand outside the US.

For some context – in January, Brex confirmed raised $300 million with a valuation of $12.3 billion. Ramp would have lifted a round that boosted his valuation to $8 billionaccording to The Information, although the company declined to comment when I reached out. Air base raised $60 million last July, and more recently, TripActions (which after the COVID-19 expanded from being a primarily “corporate travel” startup to also, more broadly, a spend management company) was valued at $7.25 billion in October.

All companies have similar missions as they want to help companies – from startups to mid-sized businesses and companies, depending on which group you are talking about – better manage their corporate spending with virtual cards and/or software.

So you can imagine the excitement the fintech geek in me felt this week when I reported how not one, but two of the players mentioned above were involved in the funding round of a new startup, Pluto, which has emerged in the corporate spending space and has focus on the Middle East. Specifically, Ramp as a company and Airbase founder Thejo Kote supported Pluto in his $6 million seed round which was led by Global Founders Capital. This is notable because Ramp and Airbase’s Kote backed a company that could be interpreted as a competitor – except it’s not because none of the players mentioned above operate in the Middle East.

So Ramp will end up buying Pluto as Brex bought Weav, the Israeli company he had invested in just a few months earlier? That remains to be seen, of course, but you know I’ll be paying close attention.

Image credits: Pluto/Pluto co-founders CTO Nayeem Zen, CEO Mo Aziz, CPO Mohammed Ridwan

public state of affairs

Meanwhile, if you had any doubts about fintech hot state, hope they will be alleviated when you check out the discoveries that Matrix Partners discovered in its Fintech Index published annually. when looking at public fintech performance relative to the broader market in 2021, the company found that its Fintech Index “significantly outperformed major public equity indices as well as a basket of legacy financial service providers for the fifth year in a row.” As a reminder, the Matrix Fintech Index is a market capitalization weighted index that tracks a portfolio of top 25 public fintech companies.

But not all public fintech companies are doing so well. Case in point, PayPal – which could perhaps be seen as one of the first fintechs – saw its stock last week drop about 25% the morning after the company’s earnings report the night before.

In my humble opinion, PayPal has become less user-friendly over the years, and I’ve heard more than one complaint about it not backing up people who have been hacked into its platform. It used to be the main method for peer-to-peer payments. But these days, I hear a lot more often, “Can I Venmo you?” instead of “Can I PayPal for you?” This is interesting considering PayPal bought Venmo in 2013 and now Venmo appears to be growing faster than PayPal’s main offering.

More evidence of this, according to PYMNTSis that Venmo’s fourth-quarter volume increased 29% to $61 billion; for the year, Venmo’s volume increased 44% to $230 billion. Part of the problem was that many of the user gains PayPal saw during the pandemic were not long-term, with large numbers of people using the platform once and not returning. It’s not a big sign.

In other public company news, Block – formerly known as Square – this week closed its $29 billion purchase of Afterpay, which we originally reported on. here. Notably, this means that Square sellers can now offer buy now and pay later to customers through Afterpay.

funding frenzy

Let’s move from the public fintech conversation to the funding rounds raised by the private ones. There were several rounds for fintech companies that we covered this week (and, of course, some that we weren’t able to access). Here’s a quick summary:

  • Metronomewhich helps SaaS companies charge based on usage using their APIs, grossed $30 million Series A led by a16z.
  • Howwhich sits at the intersection of fintech and proptech with a leasing model for SMBs, emerged from stealth with $32 million in funding. Canaan, Founders Fund, Initialized and NFX are the main investors.
  • Nigerian investment app Bamboo raised $15 million in a Series A round co-led by Tiger Global and Greycroft, writes TC reporter Tage Kene-Okafor.
  • Bolda technology company working to enable financial access to electronic payments in Colombia, raised $55 million in a Series B funding round led by Tiger Global Management.

    Image credits: Bold

  • track finances, a Brazilian fintech that aims to enable faster and simplified cross-border financing, announced a $4.3 million seed funding round.
  • tribal credita B2B payments and financing platform for emerging markets, raised $60 million in a Series B funding round led by SoftBank Latin America Fund. Coinbase Ventures also joined the funding, which included participation from existing investors BECO Capital, QED Investors and Rising Tide. Here’s a story from last year when I covered the company A-series increase.
  • tax listwhich has been described as an “Uber for taxes,” said it outperformed a $20 million Series B funding round led by Fuel Venture Capital and IDC Ventures.
  • R2which works to enable payment processors, POS systems and marketplaces to provide financing to small and medium-sized businesses in Latin America, raised $5.9 million in a round led by General Catalyst.
  • based in bangalore jar raised $32 million in a Series A funding round led by Tiger Global, only months after securing your initial funding. The seven-month fintech app is helping millions of Indians start their investment and saving journeys, reports our own Manish Singh.

new funds

There was also the emergence of some fintech-related funds. Miguel Armaza and Andrew Endicott raised $9.25 million for their fund, Gilgamesh Ventures. The early-stage company is focused on investing in fintech companies in the US and Latin America. Miguel, who is also a really nice guy, became a prominent podcast host through Fintech Leaders (which he founded) and the Wharton Fintech Podcast, which he co-hosted from January 2020 to August 2021 and grew 13x to a monthly audience of 130k.

Additionally, after spending the last 10 years as a partner investing in New York-based consumer startups at Lerer Hippeau and the Collaborative Fund, taylor greene says he “silently” raised a $50 million fund for his new company, twelve down. The fund will support early-stage New York City founders with an emphasis on fintech and healthcare, “giving them the personalized, individualized partnership they need to enter the market.” So far, it has invested in accumulate savings (seed lead) and three unannounced seed rounds in fintech and health.

Mad CEOs? made headlines again last week as more senior executives parted ways with the digital mortgage lender following the return of CEO Vishal Garg, just weeks after it was revealed that two board members had resigned from the company. I got the spoon with all kinds of juicy details here. Also, be sure to check out Connie Loizos’ excellent coverage of the fact that Bolt’s Ryan Breslow is is no longer CEO of the fintech he founded after his “fiery rants” on Twitter angered more than just a few feathers.

Before I go – I had the honor of being included in Belvo’s list List of the top fintech influencers and newsletters to follow in 2022. I had never thought of myself as an influencer, but if the term refers to fintech, I will gladly accept it – especially since I am among the stellar companies on this list.

And that’s a wrap. I would like to acknowledge that there were a lot of men in the issue of this column, so more women in fintech to come. Happy Sunday and see you next week!

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