Tanvi’s Take: Expense Management is the Next Frontier of B2B Fintech

Tanvi Lal
5 min readApr 1, 2022

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Photo by Austin Distel on Unsplash

Anyone who has ever had to manage expenses will tell you…it’s not fun. As a former consultant, let me reiterate how un-fun expense management is. Travel expenses, business expenses, heck even personal expenses are tedious, manual, time-intensive, and frankly boring. BUT as I like to say…

The more boring something is, the more opportunity there is.

While the best market size number I could find for expense management is $6.9B, I’m convinced the actual market is significantly larger. Just look at the exits we had within the last year!

Driving recent news — Brex, Ramp, and Jeeves recently all raised money at huge steps up in valuations. It’s not just VCs conflating their valuations either…they’re all seeing impressive traction:

  • Brex’s total customers grew by 80% in Q1 of last year
  • Ramp saw a 10x increase in 2021 revenue
  • Jeeves increased its revenue by 900% and doubled its customers in the last 6 months

So, what’s going on in this space? How do expense management platforms differentiate themselves and win? How large is this market and where are there areas of opportunity? Read on to find out!

There’s no one-size-fits-all: 5 Approaches to Expense Management

Today’s expense management companies have all approached their competitive wedge in a number of ways. Let’s dig into the top incumbents in the space and learn how they did it!

Brex: your trusted banking partner

Brex started as a corporate card for startups. This made sense — it’s inherently riskier to provide credit products to startups. Unlike banks, Brex didn’t require a personal guarantee or deposit. This value proposition was a no-brainer: with Brex, startups had a higher line of credit, rewards, and access to spend reporting. Fast forward 5 years, and Brex now offers instant payments (for a fee of course), bill pay, and venture debt. They’ve broadened their reach from startups and are now targeting mid-market companies with higher spend volumes. Last year, they applied for a banking charter and even poached an SVB executive to run it, but later abandoned this path.

The Brex recipe to success: become more than spend management and expand into banking.
Brex’s most recent funding: $300M Series D2 in Jan 2022, $12.3B valuation. Backers include Tiger Global, Ribbit Capital, Greenoaks, and Base10 Partners.

Ramp: we help you spend less

Ramp’s play is to help companies spend less money through automated suggestions and vendor management. Unlike Brex’s complicated rewards system, Ramp offers a simple 1.5% cashback on all purchases. Ramp is in many ways an anti-Brex: focused on your company’s expense efficiency and saving you money. Following last year’s purchase of Buyer, a contract negotiation-as-a-service company, Ramp now says it can save you ~27% on big contracts. Bonus — they have quite possibly my favorite competitor ad of all time (who doesn’t love a catchy rhyme).

The Ramp recipe to success: align your product with what’s best for your customers (saving money).
Ramp’s most recent funding: $750M in debt/equity in March 2022, $8.1B valuation. Backers include Coatue, Founders Fund, General Catalyst, and ICONIQ Capital.

Divvy: improving your financial operations

Unlike Ramp and Brex, Divvy was founded to automate expense reports for small and mid-market companies. When they launched, their differentiator was free software as well as product features like adjusting employees’ credit limits in real-time and digital credit cards to prevent fraud. Clearly — their approach worked! They sold for 25x their revenue rate at the time of acquisition, and add a crucial line of business to Bill.com.

The Divvy recipe to success: provide quality software for free and monetize elsewhere (card interchange).

Airbase: your expense management ERP

Airbase calls its product “spendlightenment” — AKA more than just spend management. While they offer similar features to Brex, Ramp, and Divvy, they are structured more like an ERP with clear workflows, approvals, and involvement from everyone in the org rather than just execs or finance teams.

The Airbase recipe to success: solve cross-functional pain points, and become mission-critical software.
Airbase’s most recent funding: $60M Series B in June 2021, $600M valuation. Backers include Bain Capital Ventures, First Round Capital, and Alumni Ventures.

Jeeves: your global startup’s financial platform

Jeeves is, in many ways, similar to Brex: focused on startups and providing financing options in tandem. Their crucial difference? Global expense management — whether it’s no-fee cross-border payments, working capital in local currencies, or the ability to pay off your balance in multiple currencies. With the recent boom we’re seeing of US investments into startups in LatAm and Africa and increasingly global workforces, Jeeves is addressing a clear pain point.

The Jeeves recipe to success: combine expense management with fintech infrastructure (cross-border payments).
Jeeves’s most recent funding: $180M Series C in March 2022, $2.1B valuation. Backers include a16z, Clocktower, SVB Capital, and Tencent.

Expense Management: What’s Next?

Access to a company’s purchasing records is power, and there is so much that can be done with that information. The success of 5 totally different plays shows just how much opportunity there is in the space, but there is still more. Here’s what I’m tracking:

  • Verticalized expense management: as with every part of fintech, verticalized solutions are coming. There’s a clear gap and need here — and I’m curious to see how incumbents will manage this competition. Early players in this space include Coast and Outgo (for fleets), Briq and Flexbase (for construction), and Lili (for freelancers).
  • Crypto expense management: as SEC regulations around crypto continue to evolve and more and more companies begin holding crypto on their balance sheet, there is going to be a clear and lucrative need for crypto expense management. Early players in this space include Rain, Multis, and Starlight.
  • An inventory management/supply chain angle: a natural complement to expense management would be an accompanying inventory management or supply chain tracking module that populates directly based on spend information.
  • International expense management platforms: these are already popping up, with incumbents like Brex and Ramp investing personally in them, but I expect to see many more. While the Europe and Indian markets are starting to get saturated (Payhawk, Pleo, Soldo, Zevoy, and Circula in Europe; Karbon, Fyle, and EnKash in India), markets like MENA (Pluto) and LatAm (Clara) have fewer players (and what about Africa?).

We’re just getting started with what expense management can do and the creative plays startups will use to gain customers. I’m excited to see which plays work and what comes next!

Thoughts? Feedback? I’d love to hear them — please comment!

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