Ramp, a well-known six-year-old fintech startup in the corporate card and expense management domain, is making significant strides into digital banking territory. This new development is encapsulated by the introduction of a new product, Ramp Treasury. Over its journey, Ramp has raised over $1.2 billion in venture funding and has diversified its offerings to include services like travel and bill pay. Today, it’s expanding further into a niche that promises to not just help customers save money but earn it as well. By offering businesses innovative financial solutions, Ramp continues to cement its position as a leader in the fintech industry.
Introducing Ramp Treasury: A New Financial Frontier
Ramp’s new offering, Ramp Treasury, is aimed at complementing existing bank accounts rather than replacing them. CEO and co-founder Eric Glyman explains that the majority of existing checking accounts linked to Ramp were yielding a meager 0.00% interest, and this new product offers a more profitable alternative. Through Ramp Treasury, businesses have the option to store cash in a business account with an interest rate of 2.5% or invest in a money market fund for potentially higher returns. This move is designed to allow businesses quicker access to their liquid cash to pay bills.
Ramp’s approach to this new offering is through partnerships. It collaborates with First Internet Bank of Indiana for the cash deposit accounts and Apex for the investment segment. While Ramp is stepping into an arena often dominated by digital banks, it emphasizes that it is not aspiring to become a digital bank itself. Instead, the treasury account is another way for Ramp to consolidate and streamline financial management for its customers. This strategic development is expected to enhance Ramp’s overall financial performance and establish it as a comprehensive financial hub for businesses, allowing them to minimize the hassle of moving cash between different accounts and entities.
Strategic Positioning in a Competitive Market
Given the crowded market, Ramp faces competition from players like Mercury, Brex, Navan, Rho, and Mesh Payments. Brex, a prominent rival, had previously applied for a bank charter but ultimately decided against pursuing it. Despite this competitive landscape, Ramp sees the introduction of the treasury product as a strategic enhancement to its financial ecosystem. The integration of Ramp Treasury into its core offerings not only diversifies its services but also strengthens its position in the market, making it a more attractive option for businesses looking for a comprehensive financial management solution.
The company has seen impressive growth metrics. While remaining tight-lipped about current revenue figures, Glyman disclosed that Ramp’s revenue grew fourfold in 2022, with its bill pay segment leading the charge. Although not yet profitable, Ramp had crossed the $100 million annualized revenue mark by March 2022 and surpassed $300 million by the summer of 2023. The customer base has expanded significantly, now exceeding 30,000, which is double the previous year. Transactions facilitated by Ramp’s offerings amount to over $50 billion, a significant leap from $10 billion about 18 months ago. This remarkable growth underscores the company’s ability to scale rapidly and meet the evolving needs of its customer base.
Diversified Revenue Model and Financial Sustainability
Ramp’s revenue model is multifaceted, drawing from interchange fees on its corporate cards, transaction fees from bill payments, SaaS subscriptions from their Plus plan, and foreign exchange fees from international transactions. It also gains affiliate fees from travel bookings. The addition of Ramp Treasury augments this revenue model by earning a spread from bank partners on aggregate balances in customer business accounts. Ramp shares much of this income with customers through the interest earn rates it promotes but retains a portion to ensure financial sustainability. This diversified revenue stream not only enhances Ramp’s financial stability but also provides multiple avenues for growth and profitability in the long term.
A significant point of note is that, unlike many other large fintech firms, Ramp has not had to lay off employees in recent years. However, the company’s valuation has experienced fluctuations. In April of the previous year, Ramp raised $150 million led by Khosla Ventures and Founders Fund, which adjusted its post-money valuation to $7.65 billion, bringing it closer to the $8.1 billion valuation from March 2022. The company’s workforce has grown substantially, crossing the 1,000-employee mark by the end of 2024, up from 730 during its last funding round. This growth in valuation and employee base signals Ramp’s ongoing commitment to innovation and expansion, even in a dynamic and competitive market.
Future Prospects and Long-Term Vision
Ramp, a prominent fintech startup that began six years ago, is making notable advances in the corporate card and expense management realm. This progress is marked by their introduction of a new product called Ramp Treasury. Over its growth trajectory, Ramp has managed to raise over $1.2 billion in venture capital funding, helping it expand its suite of services, which now includes travel and bill pay. Today, Ramp is delving further into digital banking, an area that not only aims to help businesses save money but also offers opportunities to earn money. By continuing to provide businesses with innovative financial solutions, Ramp is solidifying its reputation as a leading player in the fintech industry. This innovative edge positions Ramp to not only meet but exceed the financial needs of modern businesses, making it a pivotal force in the evolving digital banking landscape.
