Startups have long been caught in the cauldron of growth versus profitability. The Rule of 40 (growth rate + profitability should add up to 40%) has been the rule of thumb. Initially, you can get there by focusing on the growth rate, which will give you some flexibility to delay profitability but eventually you’ll need to get in the black. Controlling your spend is one way to ensure that you are able to tilt the numbers in your favor. Ramp is a corporate card and all-in-one spend management platform that’s designed to save companies time and money. The card requires no personal guarantee and provides 1.5% cashback every month. But the beauty of the platform is that all spend activity is seamlessly integrated into the company’s expense management platform that handles bill payment, card issuance and controls, accounting, and reporting, saving finance teams countless hours. All of this is free with Ramp making its margin on the interchange fees. The company on average saves its customers 3.3% (the cash back + additional cost savings) and is on pace to cross $1B in annual spending transacted on its cards.
AlleyWatch caught up with Cofounder and CEO Eric Glyman to learn more about the company’s impressive traction, strategic plans, latest round of funding, and much, much more. In conjunction with this funding, the company is also announcing its acquisition of Buyer, a platform that will be integrated into a new vendor negotiation offering for Ramp customers.
Who were your investors and how much did you raise?
We raised $300M in Series C venture funding at a $3.9B valuation. Founders Fund led the round, with participation from Redpoint Ventures, Thrive Capital, D1 Capital Partners, Spark Capital, Coatue Management, Iconiq, Altimeter, Stripe, Lux Capital, A* Partners, Definition Capital, and other existing investors.
Tell us about the product or service that Ramp offers.
Ramp is the finance automation platform designed to save you time and money. With Ramp you get 5-in-1 software that consolidates corporate cards, expense management, bill payments, accounting, and reporting into one simple and free solution.
With this unique approach to financial services, Ramp has quickly become America’s #1 rated and fastest-growing corporate card. Businesses that use Ramp save an average of 3.3% in their first year and close their books 86% faster than before.
What inspired the start of Ramp?
My cofounder, Karim Atiyeh and I previously built a consumer savings startup, Paribus. The product helped individuals get the best deal when shopping online and was eventually acquired by Capital One, where we continued to build out their consumer savings division. We came to the realization that no such product existed for businesses to prioritize their overall savings, and so this became a problem we wanted to tackle at a foundational level. As a comprehensive spend management platform, Ramp can help businesses save in virtually every aspect of their business.
How is Ramp different?
Ramp challenges the traditional financial services model by offering a card designed to help businesses spend less. While the entire card industry has historically been designed to encourage people and companies to spend more money, Ramp is taking a different approach.
Ramp is also not just a corporate card – it’s the first intelligent finance automation platform. On average customers save 3.3% annually by switching their corporate card spending to Ramp. Finance teams who use Ramp are able to account for and record all their business expenses at month-end in just over 2 hours in most cases, representing a 90% reduction in time.
What market does Ramp target and how big is it?
Ramp serves companies of all sizes, from small businesses to fast-growing startups. Customers include new disruptors like Ro, DoNotPay, Better, ClickUp, and Applied Intuition, as well as long-established organizations like Bristol Hospice, Walther Farms, Douglas Elliman, and Planned Parenthood.
What’s your business model?
Ramp does not charge for its software and makes money from credit card interchange fees.
How has COVID-19 impacted the business??
The pandemic has supercharged our business because more companies than ever are prioritizing savings and efficiency. On average customers save 3.3% annually by switching their corporate card spending to Ramp, which can be a meaningful amount of savings for any company.
What was the funding process like?
As we’ve grown during 2021 we’ve continued to have incredibly strong business performance and outcomes for our customers. Our existing investors saw that and as a result, wanted to increase their stake in Ramp. That interest kickstarted a round that was led by one of our staunchest supporters – Keith Rabois, Napoleon Ta, and the team at Founders Fund.
We’re grateful to have this ongoing support from so many leading investors, which made the fundraising process eventful and fast-paced. That support and backing is coming not just from leading institutional investors, but also fintech innovators like Stripe and incumbents like Goldman Sachs.
What are the biggest challenges that you faced while raising capital?
During a raise, distraction is easy to seep in. I would have to say that the biggest challenge when raising is ensuring we never lose sight of delivering great outcomes for our customers, and maintaining our focus and humility. A company’s bank account balance or its paper valuation do not alone not improve life for customers. Ramp’s success should be measured by the quality of delivery for our customers. Put simply, are we saving them more time and money? Keeping focus when we are scaling rapidly is an ever-present challenge.
What factors about your business led your investors to write the check?
Our existing investors bought into our vision of wanting to fundamentally change the way businesses manage and spend their money. The numbers affirm how much that vision and our product is resonating in the market: the number of businesses on Ramp has increased by 5x since January, transaction volume on Ramp cards has tripled in the last 5 months alone, and our team is now 150 strong.
Our existing investors bought into our vision of wanting to fundamentally change the way businesses manage and spend their money. The numbers affirm how much that vision and our product is resonating in the market: the number of businesses on Ramp has increased by 5x since January, transaction volume on Ramp cards has tripled in the last 5 months alone, and our team is now 150 strong.
Very few companies are able to maintain exponential growth at the scale we’re operating, all while delivering the highest-rated experience in a large, crowded market.
What are the milestones you plan to achieve in the next six months?
Following the acquisition of Buyer, within the next few months, we plan to launch our “negotiation-as-a-service” product, which will be an industry-first offering that ensures our customers never overpay their vendors. We think this is going to be a huge value add for the businesses we work with.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
It’s an exciting time to be building a company in New York, as people are returning to the city and it’s become clear the city is going to remain a crucial technology hub, particularly for fintech.
Before ever raising funding, meet with as many people as possible (in-person, or virtually when necessary) to collect feedback, iterate, learn and grow. While raising funding is exciting, it isn’t the primary milestone a company should be after. If you don’t have a product that customers love to use and will stick with, it’s difficult to go very far.
Where do you see the company going over the near term?
In the short term, we plan to open our second office, build out some exciting new products and services all in an effort to better serve our customers, and bring our offering to thousands of new companies spanning industries and size. On a longer horizon, we’re really only starting to scratch the surface on the savings we can make for our customers. Our mission is to increase the lifespan of businesses with intelligence and automation tools and we’re all energized to continue executing on that with the additional funding we’ve closed.
What’s your favorite outdoor dining restaurant in NYC
Cafe Salmagundi – their brunch is outstanding!
