Tag: Thejo Kote

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Decentralized finance may be the answer to banking’s payment rails problem

Aging payment rails is not a new problem for the U.S. banking infrastructure, but Silicon Valley Bank’s collapse put it in the spotlight, especially for payment companies that had their payment rails with the bank.

A payment rail is a network for how payments move from the payer to the payee. We’ve seen newer rails emerge in recent years, for example, the blockchain, and within the consumer realm with peer-to-peer payments via apps like PayPal, Venmo and Zelle. Most of the payments occur in real time.

Airbase was one of those fintech companies that had its payment rails with SVB. CEO Thejo Kote told TechCrunch+ that the company had to scramble to help customers make sure their payroll and vendor payments were able to resume and also remain secure.

Current payment rails, particularly in the U.S., are decades old, created long before digital payments became a way of life. In recent years, financial technology companies have built new rails, for example Stripe, Plaid and the like, but it takes years and millions of dollars to do it. Visa, too, recently partnered with PayPal, which also owns Venmo, and others to help people make digital payments regardless of which app you use.

But even with these new rails, some fintech founders say decentralized finance rails built on the blockchain could be a better answer. Especially as building on the current aging payment rails is expected to increasingly be a problem. This Finextra article notes, “as time goes by and the payments industry moves increasingly to micro, international, immediate payments with volumes that will be orders of magnitude greater than today, these problems will get a lot more visible.”

“It’s definitely archaic at this point, and it is a pretty slow kind of method of moving money, but it is also the most prevalent and popular kind of payment network in the U.S. when you’re moving money from bank to bank. There is a bunch of innovation happening right now, so there is a real-time payment craze coming up,” Kote said, referencing the Federal Reserve’s new FedNow Service. It’s set to launch in July and promises faster payment rails for financial institutions.

Decentralized finance may be the answer to banking’s payment rails problem by Christine Hall originally published on TechCrunch

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How a fintech company handled a fintech crisis

When Silicon Valley Bank collapsed earlier this month, it sent massive waves across the banking and venture capital worlds, and beyond.

Companies like Rippling, Brex and many others scrambled to secure funding to offset not being able to access funds, while companies on the payments side, like Etsy, worked to find alternative ways to process payments.

Spend management company Airbase found itself straddling both of those worlds during the SVB crisis. TechCrunch+ spoke with CEO Thejo Kote about how Airbase not only had its funds with SVB but also was “the only spend management company that uses SVB as the payment rails for large parts of our platform.”

Airbase CEO Thejo Kote. Image Credits: Airbase

When all of this went down initially, much of the attention was focused on the depositors who held funds, Airbase included; SVB was its primary operating bank, Kote said. SVB went into receivership on March 10, but there wasn’t the first sigh of relief until March 12 when the U.S. government stepped in and said deposits would be protected.

“It was kind of a rollercoaster ride until that news [about the protected deposits] came out,” Kote said. “We had a unique front-row seat to this episode as a company that has its payment rails in SVB.”

Impact on the business

Airbase currently processes over $5 billion of annual payments on behalf of its customers, with a large portion flowing through SVB from customer bank accounts. On that particular day of the collapse, a “fairly large portion” of Airbase’s customers “had payments in flight,” Kote said.

That meant that not only were they drawing funds for payroll but also to pay vendors, including many time-sensitive payments. The funds in transit totaled eight figures, and much of that was ultimately delayed by a few days, he said.

How a fintech company handled a fintech crisis by Christine Hall originally published on TechCrunch

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Say hello to the kickass final agenda for the TechCrunch+ stage at Disrupt 2022

TechCrunch is bringing our flagship event Disrupt back to the real world this year, which means we’re hard at work on our big October 18-20 shindig. Founders, investors, tech denizens, crypto fans, and the like: We’re making something incredible just for you.

And no portion of the event has me more excited than what we have in store for you on the TechCrunch+ stage, one of the two main stages that will be going all day, every day at Disrupt. After months of honing topics and ideas, researching panelists to invite, and wrangling more schedules than you want to know about, we are now locked in for Disrupt 2022. We’re so proud of what we have prepared for you.

Pro tip: Save $1,100 when you buy your pass before September 16. Tickets start at just $99 to come to the show.

Whether you are just starting out with an idea, in the midst of early-stage growth, or looking to keep your late-stage startup ahead of the curve in a busy market, we have the information you need. Sessions include well-known startup founders, investors, and executives to help elucidate not only today’s best practices for tech entrepreneurs — a very different set of advice that we heard during the bull market that came to a close in late 2021 — but also the latest and greatest from the world of company-building itself. So, yes, we do have a session that will include the word “DAO” for all the founders out there building on the blockchain.

The full agenda follows. I can’t wait to see you there!

Tuesday, October 18

Live on Stage: TechCrunch’s Chain Reaction

Join us for a live podcast recording of Chain Reaction as we unpack and explain the latest crypto news, drama, and trends, breaking it down block-by-block for the crypto-curious.

How To Build Your Early VC Network: Turning Social Capital Into Financial Capital

with Nik Milanovic (This Week in Fintech), Josh Ogundu (Campfire) and Gefen Skolnick (Couplet Coffee)

If you haven’t heard of Nik, Josh or Gefen, where have you been? They are founders that are not only building very interesting companies but have taken a forward approach toward making noise on social media. We want to dive into how being a public person can help founders build a future public company. This should be a panel that will be not only informative but also lots of fun.

How To Secure Those Hard To Find Hires

with Chris Herd (Firstbase) and Emil Yeargin (Gusto)

Hiring is not easy even in the best of times. With a tight tech talent market and an increasingly remote-friendly — and therefore globally competitive — corporate landscape, founders have never had more places to hire from and more competitors to measure up against. So we’re going to have Chris Herd from Firstbase who is an advocate for remote work and Emil Yeargin, VP of Talent at Gusto, which is not only hiring itself but also helps other companies manage their staff. We’ll go deep on hiring today with an especial focus on hard-to-fill roles.

Winning The War On Ransomware

with Brett Callow (Emsisoft) and Katie Moussouris (Luta Security)

Ransomware attacks are escalating at an alarming rate. We’ll hear from experts about what winning the war on ransomware looks like and how startups can play their part.

How To Raise First Dollars When Investors Are More Cautious, The Founder Perspective

with Amanda DoAmaral (Fiveable), Sara Du (Alloy Automation) and Arman Hezarkhani (Parthean)

While it’s always good to hear from venture capitalists when it comes to dollars and cents, how founders are navigating the capital market is just as important. So we’re gathering Amanda DoAmaral of Fiveable, Sara Du of Alloy Automation and Arman Hezarkhani of Parthean to talk us through what worked for them and how their perspective has been updated in light of the changing economy.

Founder Fireside: Faire and Forerunner Ventures

with Kirsten Green (Forerunner Ventures) and Jeff Kolovson (Faire)

The COVID-19 pandemic brought with it a boom in e-commerce and folks working on making their homes more comfortable. This shift impacted more than just consumers, however. Faire, a marketplace that connects SMBs to wholesalers, had to navigate a market replete with evolving demand and supply chain issues. Now, with the COVID period behind us (at least from a business perspective), TechCrunch will sit down with Faire co-founder and COO Jeff Kolovson and backer Kirsten Green, a founder and partner at Forerunner Ventures, to talk through the company, its market, and where it’s heading next.

What Does Product-Market Fit Mean When Hype Tanks?

with Pali Bhat (Reddit), Avlok Kohli (AngelList), and Annie Pearl (Calendly)

Reddit Chief Product Officer Pali Bhat, AngelList CEO Avlok Kohli and Calendly Chief Product Officer Annie Pearl are coming to Disrupt to help founders hone their definitions of product-market fit. The concept, often shortened to PMF, is tricky as it’s not easily defined for all startups at once. But one thing that happens when market sentiment takes a dive is that definitions tighten. So how should founders measure PMF in a more difficult market, from both a fundraising and customer perspective? We’ll find out.

Wednesday, October 19

Live on Stage: TechCrunch’s Found

Join us for a live podcast recording of Found, a show about founders, and company-building, featuring people doing the work. We’ll interview an early-stage startup founder about how they took the plunge to begin with, and how they navigate everything from building product roadmaps, to raising funding from some of the world’s top investors – and to how they manage failure, too

Building Companies with Longer Time Horizons

with Gene Berdichevsky (Sila), Erin Price-Wright (Index Ventures), and Katie Rae (The Engine)

Not every startup can generate revenue from day one. From hardware to hard science, some startups take more time to build income streams. How can founders get around revenue concerns in a more conservative funding market? And how do investors weigh risk when it comes to bets that may take longer to pull off? For growing startup categories like robotics and climate, these are not idle questions. We’re bringing Sila’s Gene Berdichevsky, Index Ventures’ Erin Price-Wright and The Engine’s Katie Rae together to share the real nuts and bolts of early fundraising in 2022. 

How To Measure TAM Without Bullshitting Yourself

with Kara Nortman (Upfront Ventures), Aydin Senkut (Felicis), and Deena Shakir (Lux Capital)

A common refrain from venture capitalists last year was that software valuations weren’t too high, as the TAM, or total addressable market for tech companies, was simply larger than folks had originally thought. Sure, but some of those startups are now stuck comparing high burn rates with future TAM. So how should founders and their backers really think about TAM to avoid bullshitting themselves or their colleagues? Upfront Ventures’ Kara Nortman, Felicis’ Aydin Senkut and Lux Capital’s Deena Shakir will tell us.

How To Raise In 2022 If You Are Not Located In A Major Hub

with Mike Asem (M25), Rich Wong (Accel) and Elizabeth Yin (Hustle Fund)

Sure, you no longer have to be located in Silicon Valley — let alone California — to build a startup or raise money. But there are still areas where there are more venture capitalists per square mile and areas where there are fewer. To get to grips on raising outside of traditional startup hubs, we’re bringing together VCs who either live and invest, or simply invest in more up-and-coming geographies. Mike Asem of M25, Rich Wong of Accel, and Hustle Fund’s Elizabeth Yin are joining us for this particular chat. It’s going to rock.

How To Compete Without Losing Your Mind Or Runway When Cash Is Expensive

with Ruth Foxe Blader (Anthemis), Eric Glyman (Ramp), and Thejo Kote (Airbase)

We love a competitive startup category here at TechCrunch. Watching startups go head to head is fascinating and illuminating. But for startups in hot sectors with big markets, competing can be very expensive. So how should startups that have incumbents to take on, other startups to best, or both, approach the balance between growth and spend this year? We’re gathering Anthemis Partner Ruth Foxe Blader, Ramp Co-founder & CEO Eric Glyman and Airbase Founder & CEO Thejo Kote to help guide more early-stage founders.

How To Raise First Dollars In A More Difficult Market, The Venture Perspective

with Annie Case (Kleiner Perkins), Jomayra Herrera (Reach Capital), and Sheel Mohnot (Better Tomorrow Ventures)

It is clear by now that the venture market has changed this year. That means that founders looking to raise first capital for their startup can’t follow last year’s playbook and expect results. So what do founders need to know, and how can they best snag investor attention in a market where the rules are changing? We’re bringing together Annie Case of Kleiner Perkins, Reach Capital’s Jomayra Herrera and Sheel Mohnot of Better Tomorrow Ventures to share the real nuts and bolts of early fundraising in 2022.

Founder Fireside with Brex and Y Combinator

with Henrique Dubrugras (Brex) and Anu Hariharan (Y Combinator)

Brex rolled into the corporate card market with a bang, blanketing San Francisco in advertising and leveraging small-city network effects to get founders to sign up other founders. But since its launch, the corporate card space has evolved into the incredibly competitive corporate spend market. How is Brex working to stay ahead of its rivals? We’ll chat with co-founder and CEO Henrique Dubugras and one of his backers, Y Combinator’s Anu Hariharan, to learn more.

Thursday, October 20

Live on Stage: TechCrunch’s Equity

Join us for a live recording of Equity, the podcast about the business of startups. We’ll unpack the numbers and nuance behind the headlines, wade through the hype to keep you up to date on the world of business, tech and VC.

Founder Fireside: Clubhouse

with Paul Davison (Clubhouse)

Few startups had as much hype – and early consumer buy-in – as Clubhouse. Since its mega-hit introduction, however, it has seen its service copied by a host of competitors while working to expand and fine-tune its model. TechCrunch will sit down with Clubhouse co-founder and CEO Paul Davison to talk about the company’s past, present, and future.

Negotiating Your First Term Sheet

with Mandela SH Dixon (All Raise), Kevin Liu (Techstars) and James Norman (Black Operator Ventures)

It’s always a good time to sit down and chat about the mechanics of term sheets and the give and take between investors and founders. It’s an especially good time now as the balance of power between founders and investors has shifted from a period in which founders never had great ability to demand friendly terms to an era in which it feels like investors have more power than in recent history. So we’ll get the latest from All Raise CEO Mandela SH Dixon, Techstars Head of Portfolio Capital & Investments Kevin Liu and Black Operator Ventures General Partner James Norman on term sheets, negotiations and terms to help founders navigate the current climate.

How To Manage Staff In A Remote, Asynchronous Reality

with Mathilde Collin (Front), Deidre Paknad (WorkBoard), and Adriana Roche (Mural)

Companies big and small are figuring out how they are going to distribute and manage their workforces in 2022. After a few years when even the most traditional company was forced to go remote, startups are now having to choose between remote setups, hybrid teams or a return to the office. But no matter what they choose, all companies are going to have more remote staff than ever before. To help founders understand how to manage those staffers, Front’s Mathilde Collin, Mural’s Adriana Roche and WorkBoard’s Deidre Paknad are joining us to talk about what works.

Founder Fireside: Metafy and Seven Seven Six 

with Josh Fabian (Metafy) and Katelin Holloway (Seven Seven Six)

Metafy is bringing video game coaching to the masses, and it’s not only for gamers who may want to go pro. As digital gaming has become one of the most important international pastimes, consumers are more willing than perhaps ever to spend on their hobby. TechCrunch will sit down with Metafy founder and CEO Josh Fabian and his venture capital backer, Katelin Holloway of Seven Seven Six, to dig more deeply into the company, its market, and how it is working to grow even faster.

Structure, Regulation, and Markets: The Road Ahead for Crypto Startups

with Brett Harrison (FTX), Mary-Catherine Lader (Uniswap Labs), Cuy Sheffield (Visa)

From DAOs and altcoins to L2-chains, NFTs, tokens, and figuring out just what the heck a security is, the crypto market is under the spotlight — and under scrutiny. TechCrunch will sit down with FTX’s Brett Harrison, Uniswap Labs’ Mary-Catherine Lader and Visa’s Cuy Sheffield to get a better handle on how they are navigating constant evolution, the new opportunities that the blockchain economy has on offer, and where they see the future taking their market.

TechCrunch Disrupt 2022 takes place in San Francisco on October 18–20 with an online day on October 21. Grab this good thing while you still can. Buy your pass by 11:59 p.m. PDT September 16, and you can save up to $1,100.

 

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Disrupt early-bird pricing extended to Friday

We see how hard early startup community members work to build their dreams. You’re all wicked busy, and that’s why we’re extending our early-bird pricing on passes to TechCrunch Disrupt, taking place on October 18–20 in San Francisco.

You get one extra week to save up to $1,300, so shake your tail feathers and buy your early-bird passes by Friday, August 8 at 11:59 p.m. PT.

Don’t fritter away this bonus opportunity to save big bucks on our flagship event where you can learn from, meet, connect and engage with tech icons, founders, investors, engineers, entrepreneurs and hundreds of media outlets.

TC Disrupt is where founders go to grow. Listen to what just some of your colleagues shared with us about the value they got from their experience:

“Disrupt is laser focused on startups. I’m just starting my own company and attending Disrupt was an incredible opportunity to connect with companies and learn from the best people in the industry.” —Anirudh Murali, co-founder and CEO, Economize.

“When you’re building a startup, you’re in the weeds. It’s hard to get a 30,000-foot view, see where your company is and where it can go. Going to Disrupt and seeing what other startups are doing gives you that important perspective. It’s a huge benefit.” —Jessica McLean, director of marketing and communications, Infinite-Compute.

“There was always something interesting going on in one of the breakout rooms, and I was impressed by the quality of the people participating. Partners in well-known VC firms spoke, they were accessible, and they shared smart, insightful nuggets. You will not find this level of people accessible and in one place anywhere else.” —Michael McCarthy, CEO, Repositax.

Here are just a few examples of the high-quality people you’ll hear and learn from at Disrupt:

TechCrunch Disrupt 2022 takes place in San Francisco on October 18–20 with an online day on October 21. You can’t possibly be too busy to save up to $1,300. Take advantage of this extended deadline, and buy your pass by Friday, August 8 at 11:59 p.m. PT.

Is your company interested in sponsoring or exhibiting at TechCrunch Disrupt 2022? Contact our sponsorship sales team by filling out this form.

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Anthemis, Airbase and Ramp will talk about balancing runway and growth in competitive sectors at Disrupt

How long is your startup’s runway? It’s an important question and an essential metric for every early-stage founder to know. But for startups wading into hot sectors with big markets — fintech alone includes corporate spend, lending, consumer services and more — competing can be very expensive. 

Striking the right balance between growth and spend is crucial for startups going up against entrenched incumbents, other determined startups — or both. 

You can understand why we’re thrilled to announce that Ruth Foxe Blader, partner at Anthemis Group; Eric Glyman, co-founder and CEO of Ramp; and Thejo Kote, founder and CEO of Airbase will tackle this topic onstage at TechCrunch Disrupt on October 18–20 in San Francisco.

In a discussion called “How to compete without losing your mind and runway when cash is scarce,” these panelists, all of whom are well-versed in traversing the issue, will offer practical advice and guidance. 

We’ll dig for specific tips and strategies that early founders can use to keep burn rate to a minimum and growth at a maximum — during a time when sanity’s at a premium. We’ll talk about marketing spend, how to hire, how to ensure that product focus is held, and more.

Ramp is just one runway success story. When the corporate management startup launched in 2020, it focused on small- to medium-sized businesses (SMBs). Just two years later, it works with businesses of all sizes, and the company’s latest funding round and $8.1 billion valuation has it closing in on decacorn status.

At the same time, Kote’s company Airbase has been tackling the same market, but with a different business model. Having both companies onstage at once should help us learn how the two companies are approaching the issue of burn and growth, and how their methods differ.

This is a must-attend chat, we reckon. Learn more about the panelists:

Ruth Foxe Blader, a thought leader in fintech and insurtech, is a partner at Anthemis, where she leads strategic investment efforts across Europe and North America. She specializes in technology-enabled business models, insurance technology, risk transfer, early stage investing, product strategy and digital transformation.

Prior to joining Anthemis, Foxe Blader worked for Allianz SE, where she spearheaded leading digital innovation efforts. A founding member of the Allianz X team, she led investments in startups, including Lemonade, Moneyfarm, Argus Cyber Security and Simplesurance. 

Eric Glyman is the co-founder and CEO of Ramp, a finance automation platform designed to help businesses spend less time and money. He previously co-founded Paribus, a digital tool that automates price protection and shipping guarantees at online retailers (acquired by Capital One in 2016).

Glyman is an active New York–based angel investor. He graduated from Harvard with a bachelor’s degree in economics and East Asian studies.

Thejo Kote is the founder and CEO of Airbase, a spend management platform for small and midsized companies. Launched in 2017, the startup — which recently announced a pilot program with Amex — has raised $101 million in venture funding from leading VC firms, including Menlo Ventures, Bain Capital Ventures and First Round Capital.

Prior to Airbase, Kote co-founded Automatic Labs, which was acquired by SiriusXM in 2017 for $110 million. Kote received a master’s degree from the UC Berkeley School of Information and a bachelor’s degree in electrical and electronics engineering from Visvesvaraya Technological University.

TechCrunch Disrupt takes place on October 18–20 in San Francisco. Buy your pass now and save up to $1,300. Student, government and nonprofit passes are available for just $195. Take advantage of the early-bird pricing while you still can. Prices increase July 29.

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Only four days left to snag early-bird savings on Disrupt passes

Tick tock, early-stage startup enthusiasts. TechCrunch Disrupt takes place on October 18–20 — the very height of pumpkin spice season. However, your chance to score early-bird passes (and soak up serious savings) disappears in just four short-but-sweaty days of summer.

Buy your pass before July 29 at 11:59 p.m. PT and save up to $1,300.

The TC editors are hard at work crafting a superb roster of speakers, presentations, panel discussions and roundtables, but it’s a bit early for the full agenda. Still, we can share some of the speakers and topics designed to help you build a successful startup. Check out just some of the presentations you’ll find on the TechCrunch + stage.

How to Build Your Early VC Network: Turning Social Capital into Financial Capital — with Nik Milanović (This Week in Fintech), Josh Ogundu (Heart to Heart) and Gefen Skolnick (Couplet Coffee): If you haven’t heard of Nik, Josh or Gefen, where have you been? These founders are not only building interesting companies, but they’re also taking a forward approach to making noise on social media. We want to dive into how being a public person can help founders build a future public company. This panel should be both informative and lots of fun.

How to Raise in 2022 if You Are Not Located in a Major Hub — with Mike Asem (M25), Rich Wong (Accel) and Elizabeth Yin (Hustle Fund): Sure, you no longer have to be located in Silicon Valley, let alone California, to build a startup or raise money. But there are still areas with more venture capitalists per square mile than others with far fewer. We’re bringing together three VCs — who either live and invest in or who simply invest in more up-and-coming geographies — to chat about raising outside of traditional startup hubs. We think it’s going to rock.

How to Compete Without Losing Your Mind or Runway When Cash Is Expensive — with Eric Glyman (Ramp) and Thejo Kote (Airbase):

We love a competitive startup category here at TechCrunch. Watching startups go head-to-head is fascinating and illuminating, but for startups in hot sectors with big markets, competing can be very expensive. So how should startups that have incumbents to take on, or that have other startups to best or both approach the balance between growth and spend this year? We’re gathering a few CEOs with a little bit of experience on the matter to help guide more early-stage founders.

Want to keep your fingers on the pulse of Disrupt and all TechCrunch events? Sign up here for updates, announcements and discounts.

TechCrunch Disrupt 2022 takes place in San Francisco on October 18–20 with an online day on October 21. Soak up serious savings. Buy your pass before the early-bird deal disappears on July 29 at 11:59 p.m. PT, and save up to $1,300.

Is your company interested in sponsoring or exhibiting at TechCrunch Disrupt 2022? Contact our sponsorship sales team by filling out this form.

 

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Brex leaving adrift some SMB customers roils corporate spend market

Brex’s decision to largely exit the SMB market has caught its customers, market observers, and even its competitors by surprise. And while the affected customers scramble to move their assets off Brex’s platform, its rivals are taking aim at the fintech and the market it’s leaving behind.

The decacorn’s decision puts a potentially material customer cohort into play, meaning that Brex’s rivals are likely gearing up to try and attract the accounts left adrift.

TechCrunch heard from a number of Brex rivals on the matter, providing us a feel for how the market views the company’s decision. Naturally, as we’re discussing competitors, they had quite a lot to say about their own products.

So to avoid being overly generous to the competing entities, we have bucketed their observations into two areas: notes on the business model and customer-related points. We’ve tried to only share observations that describe the corporate spend market more generally, and not why one particular company is better than any other.

Given how competitive the corporate spend world has proved (more here, here, and here from TechCrunch), Brex has kicked off an interesting strategic conversation in this well-funded fintech startup niche. Let’s talk about it.

Kicking the beehive

Interchange incomes usually mean low margins, so their ability to power corporate spend companies has been a point of debate for some time. Brex and Ramp started off by offering free services, while Airbase focused more on selling software. Divvy managed a huge exit on the back of just its cut of card spend fees.

Later, Brex rolled out paid software products and Airbase worked to attack the interchange model by remitting its own interchange incomes back to users as cash, more or less.

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These Y Combinator-backed startups want to build the next Brex

Unsurprisingly, fintech startups were well-represented in Y Combinator’s W22 batch, with 35 international companies participating and 25 more tagged as crypto-focused. One trend that caught our eye was that at least four startups – from three different regions – referred to themselves as the “Brex for” their particular geography.

For the unacquainted, Brex is a corporate spend company that recently became a decacorn when it raised $300 million at a $12.3 billion valuation. Brex started its life focused on providing corporate cards aimed mainly at startups and SMBs. It gradually evolved its model with the aim of serving as a one-stop finance shop for these companies.

It competes in a hot and increasingly crowded space that also includes Ramp, Airbase, and TripActions, among others. Notably, the company was started by two Brazilian-born former teen hackers who were just 22 years old when Brex came to be valued at over $1 billion.

The success of Brex has been mirrored by some of its competitors. Ramp has scaled its spend volume massively since launch, also attracting huge sheaves of cash in the process. Airbase has taken a slightly different tack on the space, with a focus on SaaS over transaction incomes, while TripActions pivoted into corporate spend from an original nexus in the business travel market. Meanwhile, Pluto recently raised funding to become the “Ramp for the Middle East.”

That the U.S. market can support so many competing startups provides context on the size of the market up for grabs. Other countries and regions could prove similar, and startups are taking note, with a number around the world looking to join the corporate spend race:

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Airbase announces free tier, plans to return nearly all interchange revenue to its customers

A good thing about technology products is that they can make a particular type of service cheaper over time. We’re seeing the phenomenon play out in the corporate spend market.

This morning Airbase, one of the North American startups competing in the corporate card and expense software space, announced that it will offer a free tier of its service, and that it will return most of its transaction revenues to customers via a new set of cash-back rates on its pre-funded and charge cards.

Airbase users that use pre-funded Airbase cards at their company will receive 2.25% cash back, while those using charge cards will receive 1.75%, the difference due to the capital cost of offering credit.

So what?

The corporate spend market has grown quickly, leading to ample venture capital and customer interest.

Broadly, there have been two models in play: Free services, and those that charge. Ramp, Divvy and Brex historically offered their services for free, making money instead via interchange, or transaction revenues. Airbase took a different tack, charging for its expense and spend management software, making it more like a traditional SaaS company.

Over time, the two models have blurred, with Brex offering paid software and, starting today, Airbase offering a free version of its product for smaller customers. Airbase’s aggressive posture is notable for its now offering a no-cost version of its software and opening its veins by giving even free customers its interchange incomes as cash back. The company is effectively repricing free corporate spend products lower by not keeping a good-sized chunk of interchange revenues for itself.

More simply, Airbase is working to eliminate the margin its competitors earn by giving it back to customers, betting that its customers’ graduation rate from its free service to its paid tier will make up for what it is giving away.

This could put Ramp and Brex in a modest pickle — their cost advantage is under attack by a historically more expensive competitor that is now offering its free customers all the interchange revenue that the competing two startups have long lived off.

The Amazon riff about margins and opportunities comes to mind here.

Not that TechCrunch expects Ramp or Brex to take this Airbase move lying down. They will not. Each has oceans of capital as well as venture backers that have shown a sharp willingness to provide them with more financial firepower. But it matters that Airbase is scorched-earthing interchange revenues by giving the money back to end-users. It makes it cheaper — to the point of negative cost — to use modern corporate spend services. That should help with customer acquisition.

TechCrunch chatted with Airbase CEO Thejo Kote about the product news, curious how much marketing effort his company was going to put into its new, free product, called Essentials. Kote said that there is a big push coming, implying that Airbase doesn’t merely want to attract a few smaller companies to its free product to later convert. It wants to get lots of them, and that, naturally, will bring it into closer competition with Ramp and Brex, which have historically focused on smaller companies.

There’s more to the corporate spend market than just business model dynamics and fundraising. Airbase expanded support for international corporate subsidiaries this September, for example, and the results of that product work will be found in customer up-sell rates from free to paid versions of the company’s software, which it reckons can take a company from inception to an eventual IPO.

But with three American corporate spend startups bashing one another over the head with capital — Airbase raised $60 million in a round led by Menlo rather recently, Brex is raising $300 million more at a $12.3 billion valuation, and Ramp raised $300 million just a few months ago — it’s fun to see where they are finding market space to undercut one another, to the benefit of customers who keep getting more for less.

Let’s see how Brex and Ramp respond, and if Airbase actually does manage to preclude interchange fees as a spend software monetization technique by simply deciding to give them back to users.