Corporate Spending Management is emerging as one of the hottest Fintech segments
Spend management software and business credit cards have emerged as one of the hottest segments in the fintech industry. The sector is attracting large financing rounds from global investors and the competition for market shares is increasing, especially in the US and Europe.
Popular fintech newsletter Fintech Wave highlighted the trend in its 49thth issue on September 27, 2022, stressing that the space was getting crowded every day with new products being launched at regular intervals.
US human resources (HR) platform Rippling, for example, last month launched its expense management platform and corporate credit card.
Rippling cost management platform, Source: Rippling
In the United Arab Emirates (UAE), in May Pemo introduced an all-in-one consumer management platform with digitized invoices, automated approval flows, one-click invoice payments and real-time cash flow monitoring. Three months later, it added physical and virtual Visa payment cards to its cost management solution.
Corporate spending is a huge market that Fintech Wave estimates is worth around $100 trillion. The space is ripe for disruption, given that spend management processes remain mostly manual, making them cumbersome, resource-intensive and error-prone.
Funding activity is picking up
In recent years, huge amounts of funding have been injected into the field, particularly for digital-first corporate card start-ups such as Ramp, Pleo and Jeeves. All three reached unicorn status in the past year after securing multi-rounds of $100 million and above.
In 2021, more than USD 2.8 billion was invested in the segment, data from Dealroom shows, and 2022 started even stronger with USD 1.6 billion secured during the first four months of the year.
Funding for corporate expense management, Source: Dealroom, May 2022
Big offers continued to come in throughout the year. Just a few weeks ago, TripActions, an American-Israeli travel, corporate card and expense management company, secured a whopping US$304 million Series G at an after-money valuation of US$9.2 billion. The startup said it would use the proceeds to fuel expansion, which it had been working towards with recent acquisitions of travel management companies Reed & Mackay, Comtravo and Resia.
Days later, US software-as-a-service (SaaS) platform WeTravel closed a US$27 million Series B for its business travel management and payment services. Helping travel businesses digitize their travel booking processes, WeTravel offers integrated payment solutions and a peer-to-peer (P2P) payment network that allows businesses to control money movements, refunds, disputes and travel transactions, charging 1% in transaction fees.
A crowded place
The US has a highly competitive consumer management and corporate credit card sector, in which Fintech Wave claims more than 20 companies currently compete.
Market leaders include Brex, a $12.3 billion fintech unicorn that claims more than 50,000 business customers, Divvy, a company owned by Bill.com that serves over 115,000 customers, and Expensify, a publicly traded company that claims 711,000 paying business customers .
Top US Enterprise Spending Solutions, Source: Fintech Wave, 2022
Europe also has a fairly crowded corporate spending and credit card space with several highly capitalized players.
UK-headquartered startup Payhawk has secured a total of $236.5 million in funding and is valued at $1 billion, according to data from CB Insights.
The company, which claims to operate one of the fastest-growing cost management platforms, expanded into the US in September after witnessing a record year of growth with revenue rising by over 520% and headcount by more than 250%.
Payhawk Dashboard, Source: Payhawk
In France, Paris-headquartered Spendesk has closed more than $300 million in funding and is valued at $1.5 billion.
The company, which provides small and medium-sized businesses (SMEs) with a full-featured solution for business expenses, including corporate cards, invoice payments, expense reimbursement, reporting and compliance, says more than €3 billion of its expenses were managed on the Spendesk platform in 2021. It claims to double the income every year.
Spendesk dashboard, Source: Spendesk
The Swiss start-up Yokoy has developed a solution to automate all AP processes from invoice capture to payment. This saves time and money and improves financial control and visibility.
The company recently raised the US80 million dollars in a funding round led by Sequoia Capital.
Software provider Abacus has seen efficiency gains by offering expense management solutions, leveraging artificial intelligence to streamline expense processing workflows.
Abacus’ expense management solutions are designed to save businesses time and money by automating the entire expense management workflow – from data entry and approval to reimbursement.
Total revenue generated by travel and expense management software is projected to reach $16 billion globally by 2027, up from $8.7 billion in 2022, Juniper Research estimates. Growth will be driven by demand for advanced technology-enabled management solutions amid rising risks of employee expense fraud.
Featured Image Credit: Edited from psd.graphics
