US fintech startup Divvy has secured $200 million in Series C funding — marking its third big venture round within a year:
Forbes. And the firm is currently registering a 30% quarter-over-quarter increase in earnings, per TechCrunch.
Divvy's rapid growth is likely tethered to its niche proposition. The startup's expense management platform provides extensive functionality for businesses and their employees. Companies can give employees spending cards, and the platform enables them to approve employee expense requests in real time. Other functionalities include enabling businesses to create virtual credit cards, manage team spending, and produce automated expense reports.
And the startup's free-to-use model — which produces revenue — is likely key in attracting customer and investor interest.Instead of charging fees for its product, Divvy, which partners with Wex Bank to issue Mastercard-branded cards, generates revenue by taking a cut of the interchange fees merchants are charged for transactions.
Expense management for businesses has long been a laborious and cumbersome process. Expense reporting systems are antiquated, often lacking the ability to give employers real-time access to employee spending or automatically file expenses. As a result, companies are susceptible to sloppy record keeping and laborious processes that waste vital resources, especially smaller businesses that lack the capacity to dedicate full-time staff to manage expense processes.
Divvy's growth is a testament to the wide addressable market these players have when it comes to disrupting and transforming financial services.We've seen numerous fintechs begin to emerge as market leaders across the finance value chain. And while certain segments, like retail banking or payments, are beginning to get crowded, we expect to see innovative startups that target other areas continue to flourish in their efforts to attract customers and investor capital alike.
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