What terminology is used to describe the funding stage that falls between a Series A and a Series B round? According to Teampay, when companies strategically accept funds, it’s referred to as a Series A-1 extension – even if the new investment is secured at a greater company valuation.

This is the approach taken by Teampay CEO Andrew Hoag with his company’s recent $5 million investment, which supplements their Series A funding from September 2019. TechCrunch previously reported on both this round and the company’s $4 million seed round in 2018, continuing to follow the progress of this corporate spend-management business.

Teampay has demonstrated substantial growth since its Series A announcement, achieving a 320% increase in annual recurring revenue (ARR) and an 800% rise in total spend managed. These figures indicate successful monetization alongside increased platform usage.

Hoag explained in an interview that Teampay aims to assist businesses in maintaining control over their finances. This has become increasingly challenging in 2020, as many companies transitioned from traditional office environments to remote work setups. The increased complexities of operating businesses following the disruptions caused by COVID-19 have benefited the startup, resulting in a shortened sales cycle and attracting larger organizations seeking assistance.

The company focuses on the midmarket, offering spend management software that addresses what Hoag identifies as a fundamental process issue, rather than simply a spending capacity concern. Teampay’s strategy isn’t to replace the corporate card, but to deliver a suite of tools for managing financial outflows, regardless of the payment method used (ACH, virtual cards, etc.).

Unlike companies such as Divvy or Brex, Teampay primarily generates revenue through software subscription fees, although they acknowledge potential for increasing revenue from spend in the future. The competitive landscape includes numerous players, including Brex, Ramp, Divvy, Airbase, as well as established solutions like Concur and Expensify.

However, with a new $5 million investment spearheaded by Fin Venture Capital, and with participation from existing investors like Crosscut, Tribe, and Precursor, Teampay is well-equipped to pursue further growth.

This funding brings Teampay’s total known equity financing to $21 million. When questioned about why the round wasn’t designated as a Series B, Hoag noted that the traditional significance of round designations has diminished in 2020, and that the current investment amount is smaller than what would typically constitute a Series B.

Instead, he stated that Teampay proactively secured a portion of its future Series B funding due to its strong growth, allowing the company to accelerate its initiatives in preparation for a larger, more conventional Series B round.

TechCrunch has observed similar extension rounds recently, indicating that successful companies are leveraging additional capital to further accelerate their progress. It will be interesting to observe how much Teampay can increase its ARR before its actual Series B funding round.