The expense management space is crowded, with deep-pocketed companies like Brex, Ramp, and Navan vying for market share.
These companies typically focus on technology startups and large corporations. But Coast, a four-year-old competitor, is managing a different type of customer: the so-called “real world” field personnel of trucking companies, plumbers, HVAC providers, last-mile delivery companies, and more. We are pursuing companies that have vehicles that meet the needs of our customers.
Founded by Daniel Simon in late 2020, Coast describes itself as a “modern financial services platform for the future of transportation.” The company has been compared to the likes of Ramp and Brex in that it develops expense management software for fleet operators and their employees. To this end, and similar to the spend management companies mentioned above, Coast has created a commercial charge card designed for companies operating vehicle fleets. That niche focus has served the company well. Coast declined to share specific revenue numbers, but CEO Simon told TechCrunch that annualized revenue and payment growth will increase by about 550% in 2023. This growth has led existing investors to double their investments in the company, while also attracting new backers. . Today, Coast announced that he has raised an additional $25 million in venture capital and $67 million in debt financing.
BoxGroup and Avid Ventures jointly led the equity raise, with participation from existing investors including Accel, Insight Partners, and Better Tomorrow Ventures. Vesey Ventures joins us as a new backer. Silicon Valley Bank (as a division of First Citizens Bank) and Triple Point Capital are providing debt capital commitments. Other investors include The Fintech Fund, founder angels including Max Levchin of Affirm, William Hockey of Plaid, Itai Damti of Unit, Ryan Petersen of Flexport, Jason Gardner of Marqeta, Laura Spiekerman and Tommy Nicholas of Alloy Contains a long list of investors.
Simon declined to reveal Coast's new valuation, saying only that “this round represents a significant step up compared to the company's previous Series A.” In February 2022, Coast raised $27.5 million in venture funding co-led by Accel and Insight Partners. The company secured more than $56 million in total equity with the latest funding, which Simon described as “more of an insider round than an extension of a Series B or Series A.”
niche focus
Historically, fleets have looked to specialized vehicle and fuel credit cards that provide controls to limit purchases to only specific grades of fuel products and track expenses on a vehicle-by-vehicle basis. But Simon argues that the companies selling these cards were founded decades ago and there has been little innovation since then.
Coast has thousands of customers who operate vehicles in service industries such as HVAC, plumbing, landscaping and pest control. construction; government fleet; and long-distance truck transportation.
“Fleets like this have data needs that regular corporate cards can't provide,” Simon told TechCrunch. “They need detailed visibility into employee spending at the line item level. For example, they want to know how many gallons of what grade of fuel is being purchased for which vehicles.”
For example, the fintech startup is adding accounting tools to vehicle telematics and fleet management to provide real-time data on vehicle condition and location, in addition to ensuring that expenses comply with company policies. It is linked to management software, he said.
Coast also claims that by offering SMS-based mobile sign-in and data collection, “we can improve security, driver convenience, and data quality for administrators.”
The company makes money by earning interchange fees from merchants when customers make purchases using Coast cards. It then charges customers a flat subscription fee of $4 per month for each card that is actually used to pay for that month.
It also offers customers a 2-cent rebate on every gallon they purchase, as well as other rebates when shopping at partners such as 7-Eleven/Speedway, Racetrack, Discount Tire and Casey's.
double
Addie Lerner, founder and managing partner of Avid Ventures, told TechCrunch that the latest injection into Coast makes the startup one of her company's “biggest positions.” He said Avid was impressed with the company's traction in non-fuel general business spending and large mid-market fleet customers.
“Coast's products certainly embody elements of Ramp and Brex's sophisticated modern software and card products, but go even further with fleet-specific features thoughtfully built into the products,” Lerner said. wrote in an email. “The combination of software and payments built specifically for an overlooked industry makes Coast very attractive.”
She described Coast's business as potentially “a very sticky, high-margin business.”
“We look at established multi-billion dollar providers in this space to understand how much scale (and profit) these businesses can make,” added Lerner. , citing companies such as Wex and Fleetcor.
Simon, who previously co-founded consumer finance startup Bread, which he sold to Alliance Data Systems for more than $500 million in 2020, said the new funding will expand Coast's capabilities and provide fleet operators with a broader range of financial products. He told TechCrunch that the money will be used to provide services.
Coast is actively recruiting human resources. Currently, the number of employees is approximately 60.
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