Hello and welcome to my weekly fintech piece. I’ll be posting this every Sunday, but in the meanwhile, listen to Alex Wilhelm, Natasha Mascarenhas, and myself riff on all things startups on the Equity podcast! And if you want this to go straight to your email once it becomes a newsletter on May 1, sign up here. PitchBook’s 2021 Annual Fintech Report was issued on March 25, and it revealed that the fintech industry raised $121.6 billion last year, up 153 percent year over year in terms of worldwide VC transaction value. That report will be the subject of a deep dive by Alex and myself next week, but it’s a good prelude to what I’m looking at today.
There has been a lot of chatter recently about a downturn in venture capital investing. However, if this week’s mega-rounds in fintech are any indicator, the industry is proving to be quite the anomaly — at least for the time being. Ramp, a corporate expenditure and spending Management Company, has revealed that it has raised $200 million in equity, secured $550 million in debt, and increased its value to $8.1 billion, which is not surprising. Not bad for a startup that only went public a little over two years ago.
Jeeves’ $180 million Series C, which tripled the company’s worth to $2.1 billion in under a year, was also reported exclusively by me. I’ve been writing about Jeeves since it emerged from stealth with $31 million in funding last June, and it’s been fascinating to see it expand. It likewise works in the corporate spend and cost management market, however with a larger worldwide reach and infrastructure. It bills itself as the world’s first “cross-country, cross-currency” cost management software. Jeeves has a presence in Latin America, Canada, and Europe, and is looking to expand there. It’s also looking into Southeast Asia, as well as Saudi Arabia and maybe Africa.
Aside from rising values, another thing that both Ramp and Jeeves have in common is that they are both experiencing hyper-growth. Unfortunately, neither startup will provide concrete sales data, as they do with most private firms. They do, however, give some metrics. Ramp claims that its income increased by “early 10x” in 2021 over 2020, while its cardholder base increased by 7x and its user base increased by 15x.
Ramp is also enabling over $5 billion in annually payments volume, according to CEO Eric Glyman. Ramp is well on its way to ramping up into significant revenue territory, given that it generates money off of each transaction. Meanwhile, Jeeves claims that its income has increased by 900 percent since its September rise, and that the first two months of 2022 brought in more money than the whole year of 2021. Meanwhile, the startup has increased its customer base to over 3,000 businesses and generated an annually gross transaction volume of $1.3 billion (GTV).
Is there enough room in this market for so many international players? That will have to wait and see. However, it will be fascinating to see how the space race unfolds. As my buddy and Equity show co-host Alex pointed out last week, it appears like these corporations can’t get enough new features and products. Brex, for example, revealed last week that it had awarded Zesty.ai, a prominent supplier of predictive data analytics in the climate risk field, with $10 million in expansion financing via venture loan. Brex started a venture debt program in August as part of its commitment to provide a variety of financial services to both startups and established businesses.
(It also applied for a bank charter last year but had to withdraw its application.) Meanwhile, newcomers are making an appearance on the scene. I recently reported about Glean AI, a new firm founded by Howard Katzenberg, former CFO of OnDeck and Better.com, that wants to help organizations save money by analyzing things like agreement terms, line-item data, duplication offers, and negotiating chances using machine learning. Startups like this keep incumbents on their toes (relatively speaking).
It’s reasonable to conclude that as long as these firms keep improving what they can provide to other businesses, the high speed of investment to support those activities will likely continue – but there’s a catch: only if they continue to develop at the rate mentioned above. It’s too early to say whether fintech is actually an aberration in terms of a worldwide venture capital slowdown, or if we’re simply seeing transactions that were started late last year start to finish. The second quarter will provide further information on whether fintech is slowing or avoiding a decline.
