A startup that's raised $25 million from Keith Rabois and Coatue is going up against $2.6 billion Brex and pitching itself as the Honey of corporate cards
- Corporate-card startup Ramp on Wednesday announced its official launch and $25 million in funding from veteran tech investor Keith Rabois, as well as others including Coatue and BoxGroup.
- The New York-based fintech analyzes customers' transactions to recognize areas where money could be saved.
- Cofounders Eric Glyman and Karim Atiyeh previously created a similar company focused on getting refunds for retail consumers through analyzing credit card transactions, which they sold to Capital One in 2016.
- Startups in recent years have looked to disrupt the corporate card space, which has long been dominated by American Express and Silicon Valley Bank. Brex, one of the more notable names, is valued at $2.6 billion.
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A credit-card company is encouraging you to spend less money.
It might sound counterintuitive, but that's the idea behind Ramp, a New York-based startup looking to shake up the world of corporate cards.
Ramp announced its official launch on Wednesday in addition to $25 million in funding it had raised during its seed and Series A. Keith Rabois, one of a group of former PayPal execs who have gone on to found other big tech names, along with hedge fund Coatue, BoxGroup, and more than 50 startup founders were among the investors.
Ramp is a corporate card where customers' transaction history is analyzed to identify areas they could recognize savings. By digging through data, the startup is looking to uncover if a company has duplicate expenses or could get better pricing elsewhere, Eric Glyman, Ramp's chief executive and cofounder, told Business Insider.
"It's meant to be assistance, almost like having a second CFO or insights that power a great finance team," Glyman said.
A major revenue stream for credit cards typically comes from interchange collected when the card is used, thus incentivizing card companies to encourage more spending. However, Glyman said there is opportunity in just the opposite.
He cited popular browser extensions Wikibuy and Honey, both of which help customers recognize savings and were acquired by Capital One and PayPal, respectively, as examples of successful businesses built on saving people money.
For Glyman, offering savings to customers right away is also a key part of the early-stage strategy for the startup, which nabbed more than 100 customers during stealth mode.
"We believe it will help us earn a market share much more rapidly, growing our top line," Glyman said. "Then over time ensuring that businesses last longer, have better financials, waste less time, and ultimately have the wherewithal to focus on building great businesses."
Glyman and cofounder Karim Atiyeh are no stranger to finding savings for customers by analyzing credit card transactions. The duo created Paribus, an app that scans customer's receipts to find potential refunds if the product was offered cheaper by a competitor or at a lower price shortly after purchase. Launched in 2014, Paribus was eventually acquired by Capital One in 2016.
Currently, Parabis has recognized over $29 million in potential savings for customers, according to its website.
Rabois, a general partner at Founders Fund, told Business Insider the fact Glyman and Atiyeh have a proven track record building out a business from digesting credit card transaction data is a differentiator.
"Understanding how the financial services data works. What you actually need to have actionable data. How to stitch the data together. How to make it actionable," said Rabois, who also joined Ramp's board. "It is something they worked on previously in their career, so they are not starting from scratch."
The corporate card space has long been dominated by two players: American Express and Silicon Valley Bank. However, in recent years newcomers have attempted to disrupt the the space.
Some, such as Point72 Ventures-backed Extend, have looked to partner with the major players to help them evolve their offerings.
Others, like Brex, aimed initially to address fellow startups that had trouble securing corporate cards. Following a $100 million round in June 2019, Brex was valued at $2.6 billion.
Glyman said Ramp's sweet spot is pre-Series A through Series B startups that are rapidly growing. And while Ramp's largest customer has 1,500 employees and smallest has two, Glyman said companies with between 30 and 400 employees is where the fintech has gained the most traction.
"We think the biggest distinction for what we do versus everybody in the market is that we align the incentives of our customers and us, which is to reduce expenditures by providing people tools and better opportunities to use their capital," Rabois said. "We don't incentivize customers with gimmicks like rewards. What we do is actually save them real money."