Corporate Spending Management Emerges as One of the Hottest Fintech Segmentsby Fintechnews Switzerland November 8, 2022
Spending management software and corporate credit cards have emerged as one of the hottest segments in the fintech industry. The sector is capturing large rounds of funding from global investors and competition for market share is heating up, especially in the US and Europe.
Popular fintech newsletter Fintech Wave highlighted the trend in its 49th edition on September 27, 2022, stressing that the space was getting crowded by the day with new products being launched on a regular basis.
American human resources (HR) platform Rippling, for example, launched last month its spending management platform and corporate credit card.
In the United Arab Emirates (UAE), Pemo introduced in May an all-in-one spend management platform featuring digitized invoices, automated approval flows, one-click invoice payments and real-time cash flow monitoring. Three months after, it added physical and virtual Visa payment cards to its spend management solution.
Corporate spending is a massive market which Fintech Wave estimates is worth some US$100 trillion. The space is poised for disruption, given that expense management processes remain mostly manual, making them clunky, resource-intensive and prone to errors.
Funding activity picks up
The past years have seen huge amounts of funding being poured into the field, especially to digital-first corporate card startups such as Ramp, Pleo and Jeeves. All three reached unicorn status over the past year after securing mega-rounds of US$100 million and over.
In 2021, more than US$2.8 billion were invested in the segment, data from Dealroom show, and 2022 started even stronger with US$1.6 billion secured in just the first four months of the year.
Large deals kept coming in throughout the year. Just a few weeks ago, TripActions, a US-Israeli travel, corporate card and expense management company, secured a massive US$304 million Series G at a post-money valuation of US$9.2 billion. The startup said it would use the proceeds to fuel its expansion, which it had been working towards with recent acquisitions of travel management companies Reed & Mackay, Comtravo, and Resia.
Days later, US-based software-as-a-service (SaaS) platform WeTravel closed a US$27 million Series B for its business travel management and payment services. WeTravel helps travel businesses digitize their travel booking processes, offering integrated payment solutions and a peer-to-peer (P2P) payment network allowing businesses to control money movement, refunds, disputes and traveler transactions, charging 1% in transaction fees.
A crowded space
The US has a very competitive spend management and corporate credit card sector, which Fintech Wave claims more than 20 companies are currently competing in.
Market leaders include Brex, a fintech unicorn worth US$12.3 billion that claims more than 50,000 corporate customers, Divvy, a company owned by Bill.com that serves over 115,000 clients, and Expensify, a publicly traded company that claims 711,000 paying corporate clients.
Europe also has a rather crowded corporate spending and credit card space with several highly capitalized players.
Payhawk, a UK-headquartered startup, has secured a total of US$236.5 million in funding and is valued at US$1 billion, data from CB Insights show.
The company, which claims to operate one of the fast-growing spend management platforms, expanded to the US in September after witnessing a record year of growth with revenue soaring by over 520% and employee headcount by more than 250%.
In France, Paris-headquartered Spendesk has closed more than US$300 million in funding and is worth US$1.5 billion.
The company, which provides small and medium-sized enterprises (SMEs) with a full-fledged corporate spending solution, including corporate cards, invoice payments, expense reimbursements, reporting and compliance, says that more than EUR 3 billion of spend was managed on the Spendesk platform in 2021. It claims to double its revenue each year.
Swiss startup 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 has recently raised US$80 million in a financing round led by Sequoia Capital.
Software provider Abacus has seen efficiencies in offering expense management solutions, harnessing artificial intelligence to streamline expense processing workflows.
Abacus’ expense processing 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 US$16 billion globally by 2027, up from US$8.7 billion in 2022, Juniper Research forecasts. Growth will be driven by demand for advanced tech-enabled management solutions amid rising risks of employee expense fraud.
Featured image credit: Edited from psd.graphics