Ramp’s Down Round and Why Startups Should Let Employees Cash Out

Since it was founded in 2019, credit card startup Ramp has won over investors with a blistering pace of growth. As card payment volume surged, the startup’s valuation exploded from $1 billion in early to 2021 to over $8 billion last year, thanks to investments from Thrive Capital and Redpoint Ventures, among others. 

Those heady times are clearly over. The New York–based startup, which competes with American Express and fellow startup Brex for the $1 trillion corporate card market, has reduced its valuation by nearly a third in a new round, I reported today. That’s a sign of the times: The jump in interest rates since 2021 has soured the environment for fintech startups, forcing them to hunt for buyers or raise money at sharply lowered valuations just to ensure survival. But that’s not really Ramp’s story.   

It’s still growing, with total payments volume expected to double to more than $13 billion this year. (It takes a slice of the fee networks charge merchants when its card customers spend money.) Of the more than $1 billion it’s raised from venture capitalists, it still has hundreds of millions of dollars on its balance sheet. So why raise money now? The answer lies with its employees. 

The deal will allow them to cash out some of their shares as well as shore up the company’s balance sheet even more. That’s a very different approach from that of another leading tech unicorn we wrote about this week—Databricks.