Most credit cards tie incentives like cashback and rewards to spending. For a cashflow-conscious business, that can put the card's benefits at odds with its customers' objectives.
Today, fintech startup Ramp publicly launched a corporate card that’s built to help businesses save money.
The challenge: Corporate spending is $700 billion each year in the U.S.
- Traditional cards incentivize companies to spend more by marrying benefits and rewards with spending.
- This can position corporate cards adversarially to their customers that rely upon them to continue running their businesses.
The product: Ramp now offers corporate cards that help companies spend less.
- To design Ramp, the founders spent time with hundreds of founders, executives, and finance teams at fast-growing companies to understand the problems that founders and finance teams experience.
- The result is a card that cares about companies scaling efficiently.
- At launch, every Ramp customer will be eligible for $150,000 in partner credits -- the highest sign-up offer available on the market, according to the company.
- Based on card usage data, Ramp shows businesses where their money is going, where they’re spending too much, and how to stop overspending.
- The card’s benefits were designed with high growth companies in mind, requiring no personal guarantees, 1.5% unlimited cashback, and high limits balanced with spend control.
“For businesses, a dollar saved is 100x better than a reward point earned," said Eric Glyman, Ramp’s CEO and co-founder.
"So Ramp focuses on reducing burn instead of rewarding wasteful spend. We think this is much more aligned with a company’s long-term success. We’re not trying to rebuild your bank. We’re working to make your business more efficient.“
Team: Ramp was founded by Eric Glyman and Karim Atiyeh, the same team that built Paribus.
- Paribus automatically scans consumer emails for receipts and then can negotiate with ecommerce companies to refund the difference if there's been a price drop.
- The duo sold Paribus to Capital One in 2016, spearheading Capital One’s push into saving technologies.
- This group at Capital One enabled automated savings on online purchases, and returns over $100 million back to consumers’ pockets every year.
- Glyman and Atiyeh realized that rewards represented a fraction of the value that could be created by helping companies identify and act on waste.
- Ramp’s team includes Affirm’s former vp of engineering, the first business hires from Plaid and Atrium, and engineers from Facebook AI Research, Google Research, Capital One, Uber, and Lyft.
Traction: A handful of America’s fastest growing startups like Candid, Better, and Ro are using the company’s card.
The industry: The success of Brex has demonstrated the demand for innovation in the corporate card space.
- The fintech unicorn Brex is parlaying its popularity, its large fundraisings and momentum to expand into banking-like services for businesses, including the recent launch of a cash management solution.
- Other startups, like Rho and Grasshopper Bank, have addressed the challenges growing companies face with new banking products and services.
- Payments firm Stripe recently launched an API for creating cards and new business models.
Investment: In addition to publicly launching, Ramp announced that it has raised $25 million in funding.
- Ramp investors include veteran fintech investor Keith Rabois of Founders Fund, who has joined Ramp’s board, Coatue, BoxGroup, Conversion Capital, Soma Capital, Backend Capital, and over 50 startup founders.
“Most companies in Silicon Valley are quite wasteful with their spending, however, without access to the corporate card, it is difficult to enact change,” said Rabois.
“This team has the perfect DNA to create the card that smart CFOs use, as opposed to creating a card whose main value proposition is its points and cafe menu. We at Founders Fund are thrilled to support this company.”