Brex, Ramp & Divvy: Fintech Landscape Shifts

Divvy Acquisition: Bill.com Eyes $2 Billion Deal

Recent reports from Alex Konrad and Eliza Haverstock of Forbes indicate that Divvy, a corporate spend management company based in Utah, is exploring a potential sale to Bill.com, with a valuation potentially exceeding $2 billion. This development represents a significant event within the fintech industry.

The Rise of Corporate Spend Startups

Companies like Ramp and Brex have experienced rapid growth and secured substantial funding. This success is largely attributed to their innovative approach to corporate cards.

Initially, these startups focused on providing corporate cards. However, they’ve increasingly expanded their offerings to include software solutions that streamline expense tracking, manage spending permissions, and ultimately, reduce costs for businesses.

Software Integration as a Key Differentiator

Ramp initially distinguished itself by concentrating on spend control features. Subsequently, the company integrated expense tracking capabilities into its software suite.

Brex, a pioneer in providing corporate cards to startups and emerging businesses, has also significantly enhanced its software offerings. The company recently announced a subscription-based software package alongside a major funding round.

While some competitors, such as Airbase, charge for their software, Divvy has traditionally offered its services without subscription fees.

Bill.com's Strategic Move

The growing sophistication of software from corporate spend startups may be impacting the traditional corporate payments and expense management software sectors.

For Bill.com, a prominent player in the payments space, and Expensify, a leader in expense management, this potential disruption could hinder growth. Acquiring Divvy allows Bill.com to proactively address this challenge by absorbing a growing customer base and mitigating competition.

Industry Reactions: Ramp and Brex Weigh In

TechCrunch sought insights from Eric Glyman, CEO of Ramp, and Henrique Dubugras, CEO of Brex, regarding the potential acquisition.

Glyman expressed confidence in Ramp’s ability to deliver a comprehensive, single-platform solution, asserting that his company is “a year ahead of the competition.”

Dubugras offered a similarly optimistic perspective. When questioned about whether Divvy’s sale indicated a struggle to compete in a highly funded and competitive market, he responded with a focused message.

Both CEOs emphasized the importance of an integrated platform that combines spend tools with robust spend control software.

Future Outlook

Brex indicated that the acquisition would not significantly alter its growth trajectory, citing “triple digit growth in 2021.” Dubugras also revealed that Brex is actively exploring potential acquisitions of its own.

The question now is whether this deal will trigger further consolidation in the corporate spend startup landscape, potentially leading to additional acquisitions or even initial public offerings (IPOs).

The market will be watching closely to see what unfolds next.