Coast raises $92 million in new capital, partners with Visa to expand financial tools and software for modern business fleets
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Insights
The recent funding round for Coast, a company specializing in fleet and fuel management, is indicative of investor confidence in the niche of fleet management solutions. The infusion of $92 million, split between equity and debt capital, signals a robust valuation and growth potential. This level of investment suggests that the market for fleet management tools is ripe for innovation, particularly in the domain of digitalization and real-time data utilization.
Coast's approach to integrating mobile technology with vehicle data and telematics represents a significant step forward in this industry. By offering advanced features such as real-time transaction flagging and location-based controls, Coast is positioned to capture market share from traditional fuel card services. The potential for increased efficiency and fraud prevention could resonate well with fleet-operating businesses, which are currently managing substantial annual fuel payments.
The focus on mobile technology and automated systems could also indicate a shift in how fleet expenses are managed, with a trend towards more agile and responsive solutions. As Coast's technology gains traction, it could pressure incumbents to innovate, potentially leading to broader industry advancements in payment solutions and fleet management.
The $92 million funding for Coast, comprising both equity and debt, reflects a strategic financial decision. The equity component, led by a mix of existing and new investors, demonstrates sustained interest and validates the company's past performance and future prospects. On the other hand, the $67 million in committed debt capital from prominent institutions like Silicon Valley Bank and TriplePoint Capital underscores the financial credibility and the potential for leveraging debt to fuel growth without diluting existing equity holders' stakes.
For stakeholders, the immediate impact could be an acceleration in Coast's product development and market expansion efforts. Long-term benefits may include the establishment of a strong foothold in the fleet management market and possibly an expansion into adjacent markets. However, there are risks associated with the debt component, such as the obligation to service the debt, which could impact financial stability if the company's growth does not meet expectations.
Investors should monitor Coast's ability to turn this capital infusion into revenue-generating opportunities, particularly in a market where annual fuel payments are substantial. The company's performance in the coming quarters will be critical in assessing the return on this investment and its impact on the stock market, especially for the involved venture capital firms and financial institutions.
Coast's technological innovation in fleet payments is not just a feature enhancement; it's a paradigm shift. The integration of mobile technology with vehicle telematics is transformative, allowing for a more granular and dynamic approach to managing fleet expenses. Traditional fuel cards offer limited control and visibility, whereas Coast's solution provides real-time data and the ability to tailor controls to specific on-the-job needs.
The use of real-time information from drivers' phones and onboard computers to authorize or flag transactions can significantly reduce unauthorized spending and improve operational efficiency. This technology could lead to a reduction in operational costs for businesses with large fleets, potentially improving their bottom lines. Additionally, the data collected through Coast's system can offer insights into driver behavior and vehicle usage, which can be leveraged for further optimizations.
As businesses increasingly prioritize data-driven decision-making, Coast's offering aligns well with the trend towards digital transformation in the commercial fleet industry. The ability to automate approvals and alerts through SMS workflows simplifies the management process, which could be a key differentiator in a market where ease of use can drive adoption.
For the nearly one million American businesses that collectively operate around 40 million vehicles in their commercial fleets – including field service businesses like HVAC, plumbing, landscaping, pest control, construction, government fleets and long-haul trucking – managing expenses in the field is a major challenge. Over the decades, a handful of now very large incumbent payment solutions have emerged to serve fleet-operating companies' needs with fuel cards, to allow fleet managers to set field-specific controls, like restricting purchases to only fuel products, or tracking expenses on a per-vehicle basis. The fleet fuel payments on these specialized cards add up to a staggering
Coast, led by founder and CEO Daniel Simon, reimagines the fleet payments product category, enabled by mobile technology and state-of-the-art vehicle data and telematics.
Coast's software gives fleet managers powerful policies and controls that they can tailor to the on-the-job needs of different employees and vehicles in their fleets. It uses real-time information that employee drivers provide through their phones, as well as data from the onboard computers of company vehicles, to authorize or flag transactions. For example, the fleet manager of a commercial construction HVAC company could receive an alert if a driver purchased unleaded gas when driving a company diesel vehicle, indicating potential abuse; automatically block a transaction when the attempted purchase is far from the current GPS location of the vehicle; or pre-approve a one-time extra purchase of on-the-road supplies at Home Depot with a simple, automated SMS workflow.
"We've been amazed by the pace of execution of Coast's business since we first invested in the company at its founding, as well as by the scope and consistency of Daniel's vision for financial tools for fleet operating industries," BoxGroup Partner Adam Rothenberg said about the round. "In the current market, it's more important than ever to back companies that have shown they can achieve really great unit economics by serving a well-understood need. We were thrilled to find an opportunity to deepen our investment in Coast and continue our partnership with Daniel."
The market has greeted Coast's offering with enthusiasm. The company has grown its business more than fivefold in 2023, and it now serves thousands of businesses, some with just a handful of fleet cards and others with over 1,000. Surveyed customers saved an average of 9
Coast software controls have been so effective in reducing abuse and waste that the company recently rolled out a first-of-its-kind security guarantee, promising to cover any losses for fuel theft up to
To add to their momentum, Coast has inked partnerships with fuel brands such as 7-Eleven Fleet (including Speedway), Casey's, RaceTrac, and EG America brands (including Cumberland Farms), as well as retailers like Discount Tire to offer larger discounts to Coast customers while driving loyalty and repeat business for these brands.
Coast also announced that it had entered into a relationship with Visa, a world leader in digital payments, to accelerate its fleet offering.
"Coast has been an innovative leader in fleet payments, and Visa is excited to collaborate further with them to create a new generation of offerings enabled by Coast's powerful expense management software," said SVP, North America Head of Visa Commercial Solutions Veronica Fernandez. "With Coast's platform and Visa's advancement in fleet, together we can provide more security, control, visibility, and reporting to all kinds of fleet operators, for all of their vehicles, both gas and electric."
Coast cards are issued by Celtic Bank, pursuant to a license from Visa
With the new funding, the Coast team will focus on product development, adding new integration partners as well as supporting businesses expenses beyond fuel. The raise will also accelerate Coast's go-to-market capability, including the establishment of a second site in
"Coast is the financial platform for the future of transportation and the trades," Simon said. "We are building a holistic expense management and finance platform for fleet-operating businesses. We're now well-positioned to expand our product and get it in the hands of more fleet operators and drivers."
Avid Ventures Founder and Managing Partner Addie Lerner said that they are convinced the Coast team's vision is sound.
"Since initially partnering with Daniel and Coast over three years ago, our conviction in the team's vision and execution capabilities has only deepened," Lerner said. "This recent investment makes Coast one of the largest positions in Avid's first fund, reflecting our excitement in Coast's trajectory towards reshaping the industry. The team and market opportunity, combined with the company's best-in-class unit economics, rapidly evolving product suite, and growing traction with larger fleets reinforce our confidence."
Brian Foley, the head of warehouse lending and relationship management for SVB's national fintech practice, said that SVB is excited to continue to support Coast's growth.
"Coast provides a strong financial product backed by powerful software for fleet-operating businesses, which allows it to attract very high-quality companies as customers," Foley said. "SVB is excited to continue to provide the debt capital to help them serve these businesses for the long term."
About Coast
Coast is re-imagining the trillion-dollar US B2B card payments infrastructure, with a focus on the country's 500,000 commercial fleets, 40 million commercial vehicles, and many million commercial drivers. Drivers, fleets, and the merchants that serve them all increasingly demand modern digital payments experiences and affordable and transparent financial services products. Coast's mission is to deliver them at a transformational scale and to improve working lives in one of the country's biggest industry sectors. Coast is founded and led by Daniel Simon, who previously co-founded digital payments platform Bread (breadpayments.com), which was acquired by Alliance Data Systems for more than
About BoxGroup
BoxGroup is an early-stage venture capital firm based in NYC and SF. BoxGroup backs entrepreneurs building disruptive technology companies and with visions to create the next generation of category defining businesses. BoxGroup's portfolio across seven funds includes early investments in Plaid, Ramp, Stripe, Flatiron Health, Airtable, Amplitude, Ro, Scopely, and more. https://www.boxgroup.com/
About Visa
Visa Inc. (NYSE: V) is a world leader in digital payments. The company's relentless focus on innovation is a catalyst for the rapid growth of digital commerce on any device for everyone, everywhere. As the world moves from analog to digital, Visa is applying our brand, products, people, network and scale to reshape the future of commerce.
For more information, visit About Visa, visa.com/blog and @VisaNews.
About Avid Ventures
Avid Ventures is a
About Silicon Valley Bank
Silicon Valley Bank (SVB), a division of First Citizens Bank, is the bank of some of the world's most innovative companies and investors. SVB provides commercial and private banking to individuals and companies in the technology, life science and healthcare, private equity, venture capital and premium wine industries. SVB operates in centers of innovation throughout
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