8 months ago
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The expense management arena is a crowded one, with well-funded players such as Brex, Ramp and Navan all clamoring for market share.
Those companies are generally focused on tech startups and large corporations. But a four-year-old contender, Coast, is pursuing a different type of customer — businesses with so-called “real-world” field personnel and fleets to manage like trucking companies, plumbers, HVAC businesses or last-mile delivery companies.
Founded in late 2020 by Daniel Simon, Coast describes itself as the “modern financial services platform for the future of transportation.” It compares itself to the likes of Ramp and Brex in that it has developed expense management software for fleet operators and their employees. To that end, and like the aforementioned spend management companies, Coast has created a commercial charge card designed for the businesses that operate vehicle fleets, as that niche focus has served the company well. While Coast declined to divulge hard revenue figures, CEO Simon told TechCrunch that it saw about 550% increase in annualized revenue and payment volume growth in 2023. That growth prompted its existing investors to double down on the company, while attracting a new backer as well. Today, Coast is announcing that it has raised an additional $25 million in venture capital and $67 million in debt financing.
BoxGroup and Avid Ventures co-led the equity raise, while other existing investors such as Accel, Insight Partners and Better Tomorrow Ventures participated. Vesey Ventures joined as a new backer. Silicon Valley Bank (as a division of First Citizens Bank) and Triple Point Capital are providing the debt capital commitment. Other investors include The Fintech Fund and a long list of founder angel investors such as Affirm’s Max Levchin, Plaid’s William Hockey, Unit’s Itai Damti, Flexport’s Ryan Petersen, Marqeta’s Jason Gardner and Alloy’s Laura Spiekerman and Tommy Nicholas, among others.
Simon declined to reveal Coast’s new valuation, saying only that “the round represents a significant step up over the company’s prior Series A.” In February 2022, Coast raised $27.5 million in venture funding co-led by Accel and Insight Partners. With the latest raise — which Simon described as “not a Series B or a Series A extension” but more of an insider round — the company has secured a total of over $56 million in equity.
Niche focus
Historically, fleets have turned to specialized fleet and fuel credit cards that provide controls like restricting purchases to only fuel products of a particular grade or tracking expenses on a per-vehicle basis. But Simon argues that the companies that sell such cards were founded decades ago with very little innovation since.
Coast has thousands of customers that operate fleets in service industries such as HVAC, plumbing, landscaping and pest control; construction; government fleets; and long-haul trucking.
“Fleets like these have data needs that regular corporate cards don’t provide,” Simon told TechCrunch. “They need detailed visibility at the line-item level into their employees’ spending. For example, they want to know how many gallons of which fuel grade are being bought for which vehicle.”
For example, in addition to making sure expenses comply with company policy, the fintech startup has linked its accounting tools with vehicle telematics and fleet management software in an effort to provide real-time data on vehicle status and location, he said.
And by offering SMS-based mobile sign-in and data collection, Coast claims it can “improve security, convenience for drivers, and data quality for managers.”
The company makes money by earning interchange fees from the merchant when its customers use the Coast card to make purchases. And it charges customers a flat subscription fee of $4 per month per card that is actively used to make payments that month.
It also offers a 2 cent rebate to the customer for each gallon that they buy as well as other rebates when customers shop with its partners, which include 7-Eleven/Speedway, RaceTrac, Discount Tire and Casey’s.
Doubling down
Addie Lerner, founder and managing partner of Avid Ventures, told TechCrunch that the latest injection into Coast makes the startup one of her firm’s “largest positions.” She said Avid was impressed by the company’s traction with non-fuel general corporate spend as well as larger mid-market fleet customers.
“Coast’s product certainly embodies elements of Ramp and Brex’s sleek modern software and card offering, but goes even further with fleet-specific features thoughtfully built into the product,” Lerner wrote via email. “The combination of payments with software that is purpose-built for an overlooked industry makes Coast quite compelling.”
She described Coast’s business as one that can be “a very sticky and high-margin business.”
“We look at established multibillion-dollar providers in the space to understand just how large (and profitable) these businesses can get,” Lerner added, pointing to companies such as Wex and Fleetcor.
Simon, who previously co-founded consumer finance startup Bread, which sold to Alliance Data Systems for more than $500 million in 2020, told TechCrunch the new capital will go toward expanding Coast’s capabilities and offering a wider range of financial products to fleet operators.
Coast is also actively hiring. Presently, it has about 60 employees.
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