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Payhawk, a $1 billion corporate card startup, plans M&A shopping spree after 86% sales growth

AMSTERDAM — Payhawk, a corporate payments startup, plans to expand through mergers and acquisitions to compete with major players such as SAP.

Payhawk, founded in Bulgaria, said it is looking to acquire a company or companies in the series A stage of development, which refers to early-stage startups that have already raised significant funding.

In an interview with CNBC, Payhawk’s co-founder and CEO, Hristo Borisov, stated that he believes his company has a better “product-market fit” than its competitors, which have achieved multibillion-dollar valuations by providing free corporate cards to other startups.

“We see an opportunity to have much better unit economics in this business,” Borisov told CNBC during the Money 20/20 conference in Amsterdam this week. “We believe companies like Brex and Ramp still haven’t found strong product market fit for what this potential market is going to be.”

Payhawk is a corporate spend management platform that provides smart cards for clients’ employees to make payments and track their expenses. Decathlon and Vinted are among its clients.

Payhawk reported significant growth in the first quarter, indicating a focus on consolidation. It revealed that revenue increased 86% year on year globally, with sales increasing 127% in the United Kingdom, which now accounts for 27% of total revenue.

Payhawk’s growth was driven by a significant increase in clients. The company reported a 58% year-over-year increase in customers in the three months ending March 31, with the United Kingdom once again playing a significant role.

Payhawk now wants to build on that growth, with Borisov citing mergers and acquisitions as key to unlocking future opportunities.

Many businesses that got funded in last two or three years are now in a position where they’re looking at strategic options,” Borisov stated. “This is something we are actively doing. We are looking for companies to buy.”

“Our vision is to be able to provide a single platform that provides a homogeneous environment your corporate expense needs with a single provider,” he stated. “There is going to be some market consolidation.”

Borisov does not intend to acquire companies in the US market. However, Payhawk has a partnership with American Express through the Sync Commercial Partner Program.

He added that its renewed growth over the past year has piqued the interest of external investors, following a tougher 2022 and early 2023.

“Fundraising is something we do every day,” he explained. “It isn’t because we need the money. “The worst time to fundraise is when you need money.”

“We’re speaking to investors daily, understanding where the market is,” Borisov stated. “Partners who do believe in that vision see the same way.”

Payhawk may seek to raise a new venture round this year or next, Borisov added. The company, which is backed by venture firms Lightspeed, Greenoaks, and Earlybird, has raised $240 million to date.

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