Inside expense management platform PEX’s $160m capital raise

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It’s been nearly 20 years since Toffer Grant founded business expense management fintech PEX, and the company has been through several different iterations. Starting as a prepaid card provider in 2007, PEX has now evolved into a larger payments, credit, spend management, and automation software platform.

Earlier this year, even amid the investment squeeze in the SaaS industry, PEX secured $160 million in a debt and equity funding round led by Bluff Point Associates.

Part of the capital infusion will go toward “a serious investment in AI, the kind that takes the manual grind—matching receipts, coding expenses, reconciling accounts, ordering cards, managing card balances—off people’s plates,” Grant wrote in the blog post announcing the deal.

But “the credit piece, through Clear Haven Capital Management, is the lion’s share of the round,” Grant told CFO Brew. The facility will accelerate the growth of PEX’s charge card program.

PEX had “a sustainable business,” Grant continued, but shifts in credit underwriting and advancements in technology in the last two decades “opened up the opportunity for us to get into credit.” A credit version of PEX’s card has allowed PEX to generate new growth, which Grant said “always attracts investors.”

Long ago. The unusual thing about PEX’s capital raise was that it was the company’s first formal funding round in 14 years.

“2012 was the last one, and that was a Series B, and it’s a testament, I think, to the fact that we’ve been a very lean and serious operation…I think this was born out of our need to reinvent ourselves a little bit, as well,” he said.

Grant said Bluff Point CEO Tom McInerney personally invested in PEX in 2010, before he joined Bluff Point. Grant attributed part of the success of the recent funding round to those relationships that have been built over the last decade and a half.

“Tom’s a genuine person, and his team as well, they’re all down to earth; it’s a low ego kind of a situation. At the same time, they are not rich uncles, they are real investors, so they were not going to just open their wallet at any point in time…I think that if we weren’t growing in the new segments of our business, we would have not been able to secure confidence from them,” he added.

Grant said PEX was also able to attract investment because it has “other components to bolt on for revenue sources,” instead of relying on subscription fees.

The two pillars of PEX’s revenue are, of course, card fees, but also “the fact that we can charge fees for what we’re doing on top of that,” Grant said.

Zoom out. PEX plays in a highly competitive market; big outfits like American Express and JPMorgan “have been offering corporate cards and have huge portfolios for so long,” Grant said, and there are well-resourced newer entrants like Ramp and Brex (now owned by Capital One). Grant called PEX “the OG in the space…It’s also validating to see that there’s so much other investment that has been poured into the industry, to basically offset the fact that banks are just not technology companies,” he said.