Venture capitalists are showing strong interest in the rapidly growing fintech industry on both coasts. One company in particular, Coast, has caught their attention with its goal of becoming the “Brex” of “real-world” industries.
The Crowded Expense Management Arena
The world of expense management is filled with well-funded players, including Brex, Ramp, and Navan, all vying for a piece of the market. These companies tend to focus on tech startups and large corporations. However, Coast, a four-year-old contender, has set its sights on a different type of customer – businesses with field personnel and fleets to manage, such as trucking companies, plumbers, HVAC businesses, or last-mile delivery companies.
A Modern Financial Services Platform for Transportation
Founded in late 2020 by Daniel Simon, Coast bills itself as the “modern financial services platform for the future of transportation.” Simon compares it to competitors like Ramp and Brex, as it offers expense management software designed specifically for fleet operators and their employees. In addition, Coast has developed a commercial charge card tailored to businesses with vehicle fleets, which has proven to be a successful niche for the company. While Coast declines to disclose specific revenue figures, Simon told TechCrunch that the company saw a 550% increase in annualized revenue and payment volume growth in 2023. This impressive growth has prompted existing investors to reinvest in the company, while also attracting a new backer. As a result, Coast recently announced an additional $25 million in venture capital and $67 million in debt financing.
Investors Doubling Down on Coast’s Niche Focus
BoxGroup and Avid Ventures co-led the equity raise, with participation from existing investors such as Accel, Insight Partners, and Better Tomorrow Ventures. New investor Vesey Ventures also joined in. The debt capital commitment comes from Silicon Valley Bank (as a division of First Citizens Bank) and Triple Point Capital. Other investors include The Fintech Fund, as well as a long list of founder angel investors, including Max Levchin from Affirm, William Hockey from Plaid, Itai Damti from Unit, Ryan Petersen from Flexport, Jason Gardner from Marqeta, and Laura Spiekerman and Tommy Nicholas from Alloy.
Simon didn’t disclose 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 this latest raise – which Simon called “not a Series B or a Series A extension,” but more of an insider round – the company has now secured a total of over $56 million in equity.
Niche Focus Leads to Success
While fleet management is nothing new, Simon argues that the companies providing specialized fleet and fuel credit cards have been around for decades with very little innovation. Coast, on the other hand, offers a more modern and innovative approach. The company has thousands of customers in various service industries, such as HVAC, plumbing, landscaping, pest control, construction, government fleets, and long-haul trucking.
According to Simon, these types of fleets have specific data needs that traditional corporate cards cannot provide. They require detailed visibility at the line-item level for their employees’ spending, such as how many gallons of which fuel grade were purchased for each vehicle. To meet these needs, Coast has integrated its accounting tools with vehicle telematics and fleet management software. This allows for real-time data on vehicle status and location.
In addition, Coast offers SMS-based mobile sign-in and data collection, which not only improves security and convenience for drivers but also enhances the quality of data for managers.
Coast’s Revenue Model
Coast earns revenue through interchange fees when customers use the Coast card for purchases. Additionally, the company charges a flat subscription fee of $4 per month per card that is actively used for payments that month. Customers also receive a 2 cent rebate for each gallon of fuel purchased and other rebates when shopping with Coast’s partners, including 7-Eleven/Speedway, RaceTrac, Discount Tire, and Casey’s.
Doubling Down on Coast’s Potential
Addie Lerner, founder and managing partner of Avid Ventures, stated that this latest investment makes Coast one of her firm’s “largest positions.” She was impressed by the company’s traction in both non-fuel general corporate spend and larger mid-market fleet customers. Lerner also noted that, while Coast’s product shares similarities with Ramp and Brex, its fleet-specific features make it stand out in the market.
Lerner described Coast’s business as “very sticky and high-margin,” adding that the company has the potential to become a multibillion-dollar provider in the space, similar to companies like Wex and Fleetcor.
Future Plans for Coast
With the new capital, Coast plans to expand its capabilities and offer a wider range of financial products for fleet operators. The company is also actively hiring and currently has roughly 60 employees.
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