Coast raises $27.5 million from VC firms, a slew of founders to provide expense management to fleet managers – TechCrunch

Startups

Coastwhich aims to help companies control fuel and fleet spending with its expense management software, has raised $27.5 million in Series A financing co-led by Accel and Insight Partners.

The raise comes just seven months after New York-based Coast announced it had raised $6 million in a seed funding round. Existing lenders Avid Ventures, Better Tomorrow Ventures and BoxGroup also participated in the financing, together with new investors Flexport and The Fintech Fund† The company is also backed by a long list of founding investors, such as Affirm’s Among others, Max Levchin, William Hockey of Plaid, Itai Damti of Unit, Ryan Petersen of Flexport, Jason Gardner of Marqeta and Laura Spiekerman and Tommy Nicholas of Alloy.

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 Ramp, Brex or Airbase in that it has developed an expense management software platform for fleet managers and their employees. To that end, like the expense management companies mentioned above, Coast has created a commercial charge card designed for the companies that operate fleets of vehicles, such as trucking companies, plumbers, HVAC companies, or last-mile delivery companies.

In the past, fleets have turned to specialized fleet and fuel credit cards that provide controls such as limiting purchases to only fuel products of a certain quality or tracking spend per vehicle. But Simon argues that the companies that sell such cards were founded decades ago with very little innovation since then.

Most also require a driver to fill up at certain gas stations and don’t allow the operator to adjust spending controls or see transactions in real time,” he told TechCrunch.

Coast’s goal is to use technology to provide fleet owners and their employees with payment products that are intuitive and easy to use.

“Fleets like this have data needs that corporate maps don’t provide,” says Simon. “They need granular visibility into their employees’ spend at the line item level. And they need to have their employee and vehicle payments integrated into the rest of their operations.”

He added that, for example, they want to know how many liters of which fuel grade are purchased for which vehicle, or make sure their employees’ expenses are in line with company policies when those employees are in the field.

In conjunction with the funding announcement, Coast also announced it is partnering with Visa to launch a Visa Fleet card program to allow Coast Visa Fleet cardholders to make payments at North American merchants where Visa is accepted.

This new partnership will allow drivers to use the card to buy fuel almost anywhere it’s sold, Simon said. It also enables managers to allow drivers to pay for other business expenses, such as parking or maintenance, and manage them all through a single platform.

Coast’s interchangeable cards, which allow drivers and vehicles to share physical cards while still providing “fine-grained vision and control,” are designed to simplify the administrative process of running a fleet expense program. Also, the company’s SMS-based mobile login and data collection aims to improve security, convenience for drivers and data quality for managers, Simon said.

Simon previously co-founded the consumer finance startup Bread, which sold more than $500 million to Alliance Data Systems in 2020. He wants “the same kind of ease of use and the transparency that Bread brought to e-commerce consumers and retailers to a category of businesses and employees often overlooked in technology.”

In terms of its business model, Coast merchant interchange fees when its customers use the Coast card to make purchases. It also charges customers a flat subscription fee of $2 per month per employee who uses the cards to make payments that month. It also offers a 2¢ discount to customers for every gallon they purchase.

Coast currently has about 20 employees, compared to three a year ago, and aims to grow the team to about 60 by the end of the year. It also plans to use the funding to expand the platform’s capabilities and offer a wider range of financial products to fleet managers. Specifically, it wants to expand its product line to not only pay for fuel, but also other categories of commercial expenses that field workers must make on behalf of companies, such as parking, maintenance and other on-the-road expenses.

Coast is focused on expanding its existing footprint with companies in the United States that operate fleets of vehicles in a wide variety of industries, including trucking; household services such as electrical, plumbing, pest control and HVAC; and transportation, delivery and others.

“The company’s goal today is to provide the best possible solution for small and medium-sized businesses, from just half a dozen vehicles to a few hundred vehicles, but the software scales to meet the needs of much larger enterprise fleets, ‘ said Simon.

Rebecca Liu-Doyle of Insight Partners believes the next wave of spend management will include solutions focused on solving category-specific pain points with “targeted” capabilities for both workflow and payments.

“Daniel and Coast have all the right ingredients – they are focused on solving the pain of fleet managers with an elegant, user-centric approach,” she added.

Accel partner Amit Kumar notes that fleets make up “a disproportionate segment” of all domestic B2B spending and yet are underserved by modern financial products and services.

“Coast’s fintech pedigree and sophistication have enabled them to adapt the business card innovation we see in other fleet operator market segments,” he wrote via email.

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