- Extend, a fintech that digitally distributes corporate credit cards, nabbed $11 million in Series A funding co-led by Steve Cohen’s Point72 and Fintech Collective.
- The startup is aimed at helping banks and credit card issuers better serve their customers’ corporate expense needs.
- Andrew Jamison, Extend CEO, told Business Insider Apple’s decision to digitally distribute its own credit card, the Apple Card, is validation of the company’s strategy.
A fintech hoping to help companies better manage their corporate spending just nabbed its second round of funding in less than a year.
Extend announced $11 million in Series A funding on Wednesday. The round was co-led by Steve Cohen’s Point72 Ventures and Fintech Collective. Cohen’s fund also led Extend’s $3 million seed round last April, which included WorldQuant Ventures and Plug and Play. Reciprocal Ventures and City National Bank participated in the most recent round.
The New York-based fintech works with banks and credit networks to offer their customers’ temporary corporate credit cards via a mobile application.
In doing so, firms get better oversight of corporate spending and avoid requiring employees to constantly file reimbursement forms, a particularly painful process for freelance employees. Meanwhile, banks and credit networks are able to offer advanced capabilities for their cards without having to make heavy investments in technology.
Since its seed round last year, Extend CEO Andrew Jamison told Business Insider the startup has integrated onto two main credit networks — Visa and Mastercard — and partnered with five banks.
Jamison said working with Extend could help credit card issuers obtain even more of the corporate expenses’ market, which currently sits at $1.6 trillion in the US. Roughly $400 billion of that is spent via personal credit cards.
"If you think about it from the issuers’ perspective, there is 25% of the market they’ve not tapped because they haven’t been able to come up with a solution that allows them to give controlled access to credit cards to their broader workforce," Jamison said.
The launch of the Apple Card is also market validation that initial distribution of a credit card digitally, as opposed to doing it physically, is a viable strategy, Jamison said.
The involvement of both Apple and Goldman Sachs in a digital-first credit card will ease pushback Extend might receive from other banks uncomfortable with the process, he added.
"They are opening up the mindset of, even if it is just the consumer population, that you could actually launch first with digital," Jamison said. "I think that will also stir the banks to want to keep promoting and pushing, if only to piggyback on the messaging that Apple has gone and put out there."
Extend isn’t the only startup looking to disrupt corporate expenses. Other notable players in the space include Brex, which offers corporate credit cards to startups that might traditionally struggle to get a line of credit. The San Francisco-based startup, which received funding from Peter Thiel and Y Combinator and is valued at $1.1 billion, is aiming to appeal to larger businesses with its latest offering.
Jamison sees more value in aligning with established players in the space to help create the best offering for their clients, as opposed to circumventing them completely.
"Our philosophy here is customers are sticky, so why not go and provide capabilities to the bank that will allow them to better service their customers," Jamison said.
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