What to know about Expensify’s 2021 IPO


What if there were a company that exists to simplify the mind-numbing and frustrating process of expense management? There is: Expensify. And they’re reportedly considering a 2021 IPO. However, Expensify isn’t necessarily taking the traditional IPO route. Instead, chief financial officer (CFO) Ryan Schaffer has met with a large number of special-purpose acquisition companies, or SPACs. 

What exactly is a SPAC, and why are so many companies choosing that route to go public? Expensify has been in business since 2008, and they may pursue a 2021 IPO with one of these “blank-check” companies since there are so many SPACs vying for profitable startups ready to go public. Expensify hasn’t announced an official merger with a SPAC yet, but it seems to be in the works. 

TL;DR 

  • David Barrett founded Expensify in 2008. He originally intended it as a prepaid debit card company, which banks thought was too risky a venture to back financially.
  • Barrett, continuing as the CEO of the company, chose the “boring” option of expense management. 
  • Expense receipt management for individuals and businesses turned out to be the most useful path for Expensify to take as a business. 
  • Expensify hasn’t focused on costly marketing efforts, preferring to rely on word-of-mouth advertising (with the exception of its 2019 Super Bowl campaign “Expensify This”). 
  • The company launched SmartScan for easy receipt tracking early on, later adding real time expense reports. 
  • In November 2020, the company announced it would reach the coveted milestone of $100 million in annual recurring revenue (ARR). 
  • Expensify is reportedly considering going public through a special purpose acquisition company, or SPAC, and has plenty of options on the table. 

A company background of Expensify 

As the Expensify website explains, David Barrett originally thought of a business that provided prepaid debit cards to the homeless because he saw many of the same faces on the streets of his San Francisco neighborhood daily. He envisioned being able to hand a person a prepaid debit card connected to his own bank account so they could buy food and necessities. 

When the banks he sought funding from scoffed at the idea as being too risky and strange, Barrett got creative and shifted focus to an expense report platform. He says he never really meant to pursue that enterprise, but only use it while continuing to work on the debit card technology. At TechCrunch50 in 2008, he launched this idea and rebranded it “Expensify: The Corporate Card For The Masses!” 

Expensify’s simple technology enables employees to scan photos of their business receipts for instant expense reporting (and quick reimbursement from employers). The software-as-a-service gained quick popularity. 

Here are some key facts about Expensify today

  • The company has about 10 million users, ranging from individuals to Fortune 500 companies. 
  • They process more than 1.1 billion transactions totaling $100 billion. 
  • The company connects to 98% percent of U.S. banks and credit cards, making it simple to automatically reconcile expense reports. 
  • They employ people remotely on four continents. 

In keeping with CEO David Barrett’s original vision of founding a company that would help feed the homeless and needy, the Expensify Card offers a way to give back to worthy causes. The card as a product launched in 2019, adding “Karma Points” in 2020. 

The Expensify card is a payment card reward system that allows the card user to funnel 10% of their purchases towards a charitable organization. It’s an automatic donation to one of five funds supported by Expensify.org, each of which tackles one of the following community issues:

  1. Housing
  2. Youth
  3. Hunger
  4. Reentry
  5. Climate change

There’s one cool facet of the program in particular. It strives to match purchases with the most relevant cause (for example, a hotel booking that funnels funds toward helping the unhoused).

Expensify usually avoids massive spending on advertising in general, but they did branch into the big time in the 2019 Super Bowl. They became the smallest company in history to run a Super Bowl ad campaign, which audiences met enthusiastically.  

Expensify fundraising over time 

Expensify has been through seven fundraising rounds since launching in 2008. Here’s a glance at the company’s major funding over the years:

  • Seed funding round 1: In January 2009, Expensify conducted its initial funding round. 
  • Seed funding round 2: They raised $1 million in seed money in May 2009.
  • Series A: They brought in $5.7 million in funds in 2010, led by Redpoint.
  • Pre-seed round: Several years later, in January of 2014, they conducted a pre-seed round. 
  • Series B: Later that year, in September 2014, PJC led a $3.5 million round of new funds for Expensify. 
  • Series C: OpenView took the lead on a Series C round of Expensify fundraising, providing another $17 million. 
  • Debt financing round: In June of 2018, CIBC conducted a round of debt financing to the tune of $11 million. 

Path to the Expensify IPO 

SPACs are formed expressly in order to raise money through an IPO and use that money to take another company public. SPACs are also called a shell company because it offers no product or service itself; it only exists to bring new companies onto the public market. 

Expensify has found no shortage of potential shell companies to merge with if they choose that path, according to CFO Schaffer. The New York Times reported that “dozens” of SPACs have been courting Schaffer and Expensify in recent months. “The market seems crazy,” reported Schaffer, amazed by how quickly these blank-check companies try to move. 

The structure of a SPAC requires that it find a target company within two years. If they have failed to merge with a startup by then, the SPAC must dissolve. In this case, investors in the SPAC receive their money back, plus interest. 

The company hasn’t yet made public any official plans for the Expensify IPO, though there’s been strong speculation that they will elect the SPAC reverse merger path. The recent score of $100 million in annual revenue may spur them to get their IPO completed soon. (FYI: It’s common for companies to use the $100 million figure as a benchmark before going public.)

When is the Expensify IPO date? 

So far, Expensify hasn’t announced an official IPO date, but people familiar with the company suggest they’re pursuing a reverse merger via SPAC. As the CFO Ryan Schaffer explained, the SPAC route to an Expensify IPO is attractive because of the speed of the process as compared to a traditional IPO. 

What investors should know about the Expensify IPO 

Expensify can clearly take its pick among SPACs for an IPO merger. As soon as CFO Schaffer agreed that he would consider a blank-check company to merge with Expensify, the offers came pouring in. At first the attention was “flattering,” according to Schaffer, but eventually the meetings began to feel like “a beauty pageant,” he told NYT.

With SPAC managers offering sky-high valuations, lucrative incentives, and bonuses—and some even recruiting celebrities to attract companies—Schaffer said in a NYT interview: 

“The market seems crazy. They want to go so fast.” 

Barrett, the company’s CEO, also agreed that the meetings with SPACs were somewhat out of hand. After one of them, he asked to no longer be included in such meetings unless the prospects were serious.

The rapidity of SPAC IPOS can be both a positive and a negative. Companies may like the streamlined process, but that speed can leave some factors unchecked. Plus, the common practice of using celebrity endorsements to “sell” a SPAC could be risky, as the SEC has recently warned

The SEC released a statement saying that investors should not necessarily take a celebrity’s word that an investment is wise:

“Celebrities, like anyone else, can be lured into participating in a risky investment or may be better able to sustain the risk of loss.” 

Related: What is a SPAC?

Although Expensify humorously says on its website that its two biggest competitors are “pockets full of receipts and Excel spreadsheets,” there are other companies in the expense management space. Competitors include Abacus, Certify, and ExpensePoint, three companies providing similar services. 

Regardless of Expensify IPO date, the company has been profitable for years. With customers in nearly every country in the world (169 countries, to be exact) from 80,000 unique companies, it’s clear that Expensify has a wide reach with a targeted offering.

Plus, $100 million in annual recurring revenue is a massive milestone for the company. As TechCrunch pointed out, attaining a $1 billion valuation and getting that “unicorn” status is well and good, but there are other financial metrics that can point to business success. A billion-dollar valuation isn’t enough to fix lackluster revenues, but Expensify doesn’t seem to have that problem. 

Bottom line

Expensify is looking to go public soon, but they have yet to reveal a final decision on the strategy. It certainly sounds like a reverse merger with a SPAC is the most likely option on the table, but the company hasn’t announced which of the many available shell companies will be the winning candidate. With their track record of growing revenue and their focus on a fairly simple and needed product, the Expensify IPO date could be one to track. 

Related: What to know about Affirm’s 2021 IPO

Rachel Curry is Pennsylvania-based content writer and journalist talking all things finance. She likes to give meaning to numbers by humanizing them. You can connect with her on Twitter at @writingsofrach.

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