US company Ramp is the latest fintech to hit unicorn status
The New York-based fintech, Ramp, has reached unicorn status after its latest funding round. The new funding drive of $320m, brings the technology startup’s total valuation to $1.6bn.
Ramp was founded in 2019 by the same entrepreneurs who launched Paribus, a consumer finance fintech that was acquired by Capital One in 2016. The company, which has confirmed $115m in investments from Stripe, Capital Partners, Goldman Sachs, Thrive Capital and more, is focussed on innovating and disrupting the corporate spending field.
The new funds will be used to boost Ramp’s growth strategy and innovate new products. Those in development include new features such as cutting-edge card controls, accounting automation and automated savings. With the recent hire of former Stripe and Goldman Sachs executive Colin Kennedy as chief business officer, the company will also grow its partnerships, sales, and marketing efforts.
Ramp’s solutions revolve around creating corporate cards that are designed to save businesses money. Ramp’s solutions include managing spending from the ground up to improve control over spending and save time on transactions. Ramp provides higher card limits coupled with savings opportunities, accounting integration, automated expense management and receipt matching services
Ramp market challenges
According to reports, Ramp is emerging as a direct competitor of corporate finance giants like American Express and Brex. However, its innovative solutions are disrupting the corporate spending market because the platform’s USP includes card usage analytics that reveal excess and unnecessary transactions. Data suggests that up to a third of Ramp’s users were formerly customers of American Express, while 90% of clients have started using the services as their integrated spend management platform, effectively ousting other companies including Concur and Expensify.
The combination of low interest rates on unlimited cashback and high spending limits but with spend control, has proven popular with clients globally with Ramp’s transactions rising by 400% since November 2020.
Over the past six months, transaction volume on Ramp has grown by approximately 400%. A third of Ramp customers switched over from American Express, and more than 90% of customers adopted Ramp as a comprehensive spend management platform, replacing Expensify, Concur or manual alternatives.
Speaking about Ramp’s recent rise to success, Keith Rabois, partner at Founders Fund, says “Like Square, Paypal, and Strip e, Ramp is rapidly emerging as a generational fintech company. Though it launched publicly just one year ago, Ramp is already viewed as the obvious choice for efficient spend management at the fastest-scaling, highest-performing startups.”
He added, “We are pleased to welcome Stripe, an innovative company that we deeply admire, to the Ramp team.”
Stripe backs Step - the digital bank for teens
The Series C round raised US$100m in capital from a number of backers, including Coatue, TikTok star Charli D’Amelio, actor Jared Leto, and Will Smith’s Dreamers VC, for the enterprise.
Step provides a free FDIC-insured bank account and Visa card to teenagers. The accounts are backed by Evolve Bank and there is no subscription charge for its usage. Users don’t pay for their accounts and there are also no overdraft fees.
The mobile banking app enables parents to set controls and limits on spending and encourage responsible finances. According to data released by the company, 88% of the platform’s users say this is their first bank account.
To date, Step has seen great success in the marketplace. The company has raised more than $175m from investors and now has 1.5m users.
Stripe, which was founded by Irish brothers Patrick and John Collison, previously led Step’s $22.5m Series A round in 2019.
Step's Series B funding round also brought in $50m, and has a distinctly celeb-tinged reputation with investors including Justin Timberlake and the pop duo The Chainsmokers.
Users get access to a free, FDIC-backed bank account, a spending card and P2P payments platform to send and receive money instantly.
CJ MacDonald, chief executive of Step, said the company is aiming to improve the financial futures of the next generation. “Step is the only banking platform that enables teens to start building a positive credit history before they turn 18 and does not charge fees of any kind.
He has previously spoken about the importance of financial literacy for young people. “Money is just one of those things where I think the more educated and equipped you are early, the better decisions you can make down the road,” he told . “And you can also prevent yourself from making costly mistakes. I mean, the average American doesn't have $400 in emergency savings and pays $350 a year in banking fees. If we can help this next generation just ultimately be smarter and more educated as it pertains to money, I think we'll all be better off.”
Kyle Doherty, managing director at General Catalyst and Step board member, explained, “Gen Z is flocking to modern financial solutions that can be easily embedded within their digital lives and Step has a unique model for how to do this right.”
The news follows on from Stripe’s recent announcement that it plans to acquire TaxJar. The fintech, which builds software for online businesses that automates the reporting and filing of sales taxes, will most likely be integrated with Stripe’s billing services.
Currently, No terms have been disclosed but the Boston start-up had raised more than $60m from investors including Insight Partners.
Stripe chief financial officer Dhivya Suryadevara said of the move, “With TaxJar, we will help millions of internet businesses running on Stripe with their sales tax and make it easier for them to sell internationally.”