Dive Brief:

• After raising $50 million in equity last December, New York-based Mesh Payments will pursue about $50 million in debt financing in the next few weeks, said CEO Oded Zehavi.
• It will be used to fuel some of the corporate spend management startup’s financial operations and give customers more favorable payment terms, Zehavi said during a July 7 interview. “It’s all about supporting our growth,” he said.
• Funding raised last year has allowed the company to scale more quickly by expanding Mesh’s sales and marketing teams and fueling product development, Zehavi said. The startup still holds most of that money, he said. The company has raised a total of $63 million in venture capital since its 2018 founding.

Dive Insight:

The company wouldn’t share its current revenue, but Zehavi said Mesh is targeting $100 million in revenue by the end of 2023. Zehavi was formerly an executive at Payoneer and PayPal who founded Mesh with Eran Katoni.

Mesh has doubled its headcount since January, rising from 75 employees to about 150. Its sales, marketing and finance teams are in New York, while product and research and development are based in Tel Aviv, Zehavi said.

Given the economic shift, however, hiring is now a lesser focus for Mesh. Zehavi wouldn't identify a target headcount by the end of the year. The startup is “trying to be lean,” and trying to balance “growing too fast and making sure we are not under-servicing our clients,” he said.

Mesh, which processes about $1 billion in total payment volume annually, has close to 1,000 customers, including buy now-pay later provider Sezzle and software company Riskified. The startup serves mid-market businesses in the U.S. with 50 to 2,000 employees that are largely concerned about cash flow and incentives like cashback, Zehavi said. Mesh, which currently isn’t profitable, generates revenue from interchange fees on clients’ spending made through its platform.

As companies grapple with high inflation and less plentiful venture capital, “clients are spending less, especially on high-value categories like media and IT,” Zehavi said. 

But as spend management tools have become crucial to companies, Mesh is onboarding new clients at a faster pace and seeing more customers shift all of their payments over to Mesh’s platform, Zehavi said. That’s happening when finance teams “are really under pressure,” he added.

In March, competitor Ramp raised $200 million in equity and $550 million in debt financing to fuel its growth. Despite the investments pumped into fintechs by venture capital firms, big banks still dominate the corporate card market. Zehavi estimated newer fintech players’ market share is less than 1.5%. “It’s still totally untapped,” he said.