Ramp and Brex have diverging market strategies with M&A strategies. What do recent deals reveal about the battle lines in spend management?
Ramp, a spend management startup, announced earlier today that it had raised $300 million in Series C financing. The company was valued at $3.9 billion. It also said it was acquiring Buyer, a negotiation-as-a-service platform that it believes will help customers save money on purchases and SaaS products.
Just one week after Brex announced its $50 million acquisition of Israeli fintech startup Weav, the round and deal were announced. The deal was reached after Brex's founders invested in Weav which provides a universal API to commerce platforms.
All of the recent deals in corporate cards, spend management and other areas show that it is not enough for companies to track employee spending. The market matures, and the feature sets of the players begin to align, so the players are trying to distinguish themselves from their competition.
The point is that these deals can reveal where each company thinks they can offer and extract the greatest value from the market.
These differences are topped by another layer of divergence: While Brex has implemented a paid software tier to its service, Ramp does not.
Spend less to earn more
Let's begin with Ramp. Ramp was founded in 2019 and is relatively new in the category of spend management. It is proving to be a great success, according to all accounts. Mary Ann Azevedo, our colleague wrote:
According to Ramp, its cardholders have increased by 5x since the start of 2021. More than 2,000 businesses use Ramp as their primary spending management solution. According to Eric Glyman, CEO and co-founder of Ramp, Ramp's transaction volume has increased by 1,000% year over year.
Ramps primary goal has been to help customers save money. It offers a 1.5% cashback reward for purchases made with its cards and claims its dashboard can help businesses spot duplicitous subscriptions or license redundancies. Ramp also informs customers when they are able to save money on monthly versus annual subscriptions. This, it claims, has helped many customers get rid of established T&E platforms such as Expensify and Concur.
The company claims that customers can save 3.3% annually on their expenses by switching to its platform. This is all before they bring Buyer into the fold.
