This morning Divvy, a Utah-based startup focused on business expenses and budgeting, announced that it has completed a $200 million financing round. The capital, led by NEA with participation from Insight Venture Partners and Pelion Ventures Partners, closely follows Divvy’s recent debt raise from earlier this year.
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Divvy has raised capital quickly, including a December 2017 Seed Round and both its Series A and Series B in 2018. Toss in the company’s quarter billion dollar debt financing and its new, $200 million equity round and the company has accreted just over $500 million in capital to-date.
Even in today’s era of large rounds and venture pre-emption (VCs going to companies, looking to invest, instead of companies going to VCs, looking for investment), Divvy’s capital story is fast.
So, I got on the phone with the company to try and figure it out. Here’s what I found out.
A quick word about what Divvy does. The firm provides expense and budget tooling for businesses. That means employee access to company credit with company-set limits, further corporate card distribution, and expensing help.
Notably, Divvy manages to charge nothing for its service as it makes money from interchange fees (a small cut of what users spend on their Divvy cards). This model should be familiar to regular Crunchbase News readers as a similar monetization model to what Chime (more here) and Acorns (more here) use. It’s worth noting at this point that Divvy told this publication that it does not want to become a bank.
Divvy also says that it isn’t competing with Brex, a buzzy tech startup which is working vertical-by-vertical to improve corporate credit cards. Instead, Divvy wants to provide teams and individuals with access to set spend for projects and more, essentially providing access to slices of the firm’s credit to employees. Its product is aimed at whole companies, instead of just regular recipients of corporate cards (executives, founders, etc.).
It’s an interesting model. Expense software is notoriously bad. Corporate credit cards are never given to everyone at a company. Divvy wants to take on both at the same time.
And, as its service is free, it’s seen rapid uptake. In conversation with Crunchbase News, Divvy co-founder Alex Bean described the company’s product-market-fit (tech jargon for how well a product or service meets the needs and wants of the market at a reasonable price point) as “crazy.” The phrasing was repeated several times during the conversation.
That level of product-market-fit explains quite a lot about Divvy. Good fit between an offered service and market demand usually implies rapid growth. And it’s that growth that explains how and why Divvy has raised so much, so quickly.
A final note on Utah. Divvy is yet another quickly-growing tech company to come out of the state. Other recent Utah successes include Qualtrics (sold to SAP before it went public), Pluralsight (now public), and others. Other Utah companies known to be growing quickly include Podium (notes on its revenue expansion here), and Weave.
Venture funds are also putting more focus on the area.
I bring Utah’s tech scene up as it’s a fascinating story of a startup scene that is doing precisely what so many cities, regions, and even countries have tried to do. Namely, to build a Silicon Valley in a place that isn’t Silicon Valley. Naturally, the so-called Silicon Slopes of Utah aren’t as big as their Californian cousin, but the state is doing very well all the same.
Illustration: Li-Anne Dias.