Ramp in Talks to Raise at $21 Billion Valuation, Up 30% From June Financing
The Takeaway
Card startup Ramp is in talks to raise a new round of financing that would value it at $21 billion, a 30% jump from a June financing.
Ramp, a six-year-old corporate card and expense management startup, is in discussions with investors to raise $350 million at a valuation of about $21 billion with the investment, according to three people with direct knowledge of the fundraising, just a month after raising at a $16 billion valuation. Existing investor Iconiq is in talks to lead the round.
Back-to-back financings of this scale have become more common for in-demand AI companies, like coding upstart Anysphere and AI search engine Perplexity. But they’re unusual among fintech startups.
Investors have cooled to this sector since the 2020-2021 investment boom due to the high costs of attracting customers and risk of relying on interchange fees, or the slice of fees paid by merchants every time a card user pays for something, as a primary revenue source. However, some later-stage fintech companies have attracted investments this year as they increase revenue, including HR tech business Rippling and banking upstart Mercury.
A spokesperson for Ramp declined to comment. A spokesperson for Iconiq couldn’t immediately be reached.
Ramp’s software revenue is helping its growth story. While the company makes most of its revenue off of interchange fees, it also generates subscription revenue from selling software for managing and booking work travel.
Lately, it has been developing artificial intelligence-powered products such as AI agents to help finance staff automate humdrum tasks, such as reviewing expenses.
Ramp has also been in talks to potentially partner with the government to help manage its $700 billion internal expense card program, according to people familiar with the matter. It’s not clear how big that contract would be if it’s chosen to participate.
Ramp’s business has grown significantly over the past two years, and it was generating $700 million in annualized revenue as of the end of January.
Competitor Brex, which excludes rewards to customers and the fees it pays to banks in its revenue, is targeting $500 million in annualized revenue by the end of year. It couldn’t be learned whether Ramp’s revenue includes these fees.
The talks show how eager some investors are to back older companies if they are growing quickly. Iconiq invested in Ramp in 2021, when the fintech was valued at $3.8 billion. The firm participated in the company’s June fundraise, too.
Founded in 2019, Ramp has raised capital from Founders Fund, Coatue Management, Thrive Capital and more. With this round, Ramp will have raised $1.75 billion in equity financing.