The news: Corporate finance management startup Ramp reportedly more than doubled its revenue run rate since the start of the year, per TechCrunch.
By the numbers: Ramp CEO and co-founder Eric Glyman said that in June, Ramp closed 38% more business than it did in May, and saw the most growth in its enterprise segment—with more than a 300% surge in customers.
The market picture: Ramp operates within a competitive and growing space, dominated by Brex, and also including its American-Express-funded rival Airbase, as well as more recent entrants, Visa-backed Airwallex, Emburse, and TripActions. They’re all targeting corporate finance teams still operating with outdated, manual entry programs and seeking to modernize back-office processes—particularly by adding automation.
Though their digital solutions are in demand, these startups all face worsening market conditions. And until recently, they were predominantly fee-based. But uncertain times test companies’ business models. Of late, some fintechs have been diversifying their revenue sources beyond interchange and fees from debit cards and ACH transfers.
While Ramp is still serving SMBs, it’s now competing against Brex for enterprise customers and has remained heavily interchange-reliant.
Why it’s worth watching: Trying economic conditions may yet settle the debate on whether fintechs whose profitability depends on interchange fees can continue their rapid growth. The rising financing trends of buy now, pay later (BNPL), merchants’ mobile apps, and embedded banking within nonfinancial brands all stand to take a bite out of interchange.
But Ramp’s solution solves a very specific back-office problem. In fintech, infrastructure providers and point solutions that closely focus on improve processes seem to be faring far better than fintechs and neobanks that started out with plans to change the world and disrupt incumbents.
Also in Ramp’s favor is Glyman’s claim that it’s been “conservative in its use of funds” and has “aimed to be operationally efficient.” Firms like Andreessen Horowitz have been counseling fintechs to “control your burn” to appeal to VCs looking for capital-efficient startups and applying tighter criteria to their funding prospects.
Coming soon: Watch for tomorrow's release of Insider Intelligence analyst Tiffani Montez's report, “The Era of Uncertainty: Neobanks,” for a deeper dive into how uncertain economic conditions will push neobanks to rethink their strategies to survive.
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