Payhawk, a $1 billion corporate card startup, plans M&A shopping spree to boost its U.S. footprint

AMSTERDAM, Netherlands — Corporate payments startup Payhawk told CNBC it is planning mergers and acquisitions to grow its footprint in the U.S. and take on big players in the space like SAP and venture-backed firms Brex and Ramp.

The startup said it is looking to acquire a U.S. company or companies at the series A stage of their development, referring to early-stage startups that have already raised a significant round of funding.

In an interview with CNBC, Hristo Borisov, Payhawk’s CEO and co-founder, said he thinks his firm has a better “product-market fit” than its rivals, which have gained multibillion-dollar valuations by handing out free corporate cards to other startups.

“We see an opportunity to have much better unit economics in this business,” Borisov told CNBC at the Money 20/20 conference in Amsterdam, Netherlands, this week. “We believe companies like Brex and Ramp still haven’t found strong product market fit for what this potential market is going to be.”

Payhawk is a corporate spend management platform that issues smart cards for clients’ employees to make payments and keep track of their expenses. Decathlon and Vinted are among its customers.

In the U.S., Payhawk has partnered with American Express under the credit card giant’s Sync Commercial Partner Program. This allows it to issue virtual cards which earn rewards based on user spending.

Payhawk recorded huge growth in the first quarter, the company told CNBC. It revealed that revenue climbed 84% globally year-over-year, and sales jumped 127% in the U.K. — a market that now makes up 27% of overall revenue.

Payhawk’s growth came off the back of a significant increase in clients. The firm said it saw a 58% increase in customers year-over-year in the three months ending March, with the U.K., again, a major driver.

Now, Payhawk wants to grow its U.S. footprint in a big way — and M&A will be a key to unlocking that growth, according to Borisov.

“Many businesses that got funded in last two or three years are now in a position where they’re looking at strategic options,” Borisov said. “This is something we’re actively doing. We’re looking for companies to buy.”

“Our vision is to be able to provide a single platform that provides a homogeneous environment your corporate expense needs with a single provider,” Borisov said. “There is going to be some market consolidation.”

Asked whether his firm was looking to raise new venture funding to achieve its objectives, Borisov said that Payhawk is always in fundraising conversations.

He added that its renewed growth over the past year had garnered interest from external investors, after a tougher 2022 and early 2023.

“Fundraising is everyday,” he said. “It’s not because we need money. The worst time to fundraise is when you need the money.”

“We’re speaking to investors daily, understanding where the market is,” Borisov added. “Partners who do believe in that vision see the same way.”

Payhawk may look to raise a new venture round either this year or next year, Borisov added. The firm, backed by venture firms Lightspeed, Greenoaks, and Earlybird, has raised $240 million to date.

He said his ultimate goal is for Payhawk to become a publicly listed company, though there’s no date yet for the firm to launch a public market debut.

“Our ultimate goal is to IPO the company, this is something we’re focused on,” Borisov said. “This really depends on the market conditions and market realities.”