Coast
What do truckers, bus drivers, and jet plane pilots all have in common?
Fintech Finds: Coast
Company Snapshot
Founded: 2020
Employees: 40
Funding: $33M
Valuation: NA
Stage: Series A
Locations: New York
Company Overview
Coast is building the modern operating system for the future of transportation.
Tell Me More
Coast has created a commercial charge card designed specifically for businesses that operate commercial vehicle fleets like trucking companies, construction crews, plumbers, HVAC businesses, and last mile delivery providers. Coast was born out of the idea that many of the incumbent charge card providers like Fleet Charge have failed to meet the needs of modern-day logistics businesses. Historically, commercial fleets have used generic fuel (gas) credit cards that restrict fuel purchases to a particular grade. With little innovation in the space, many legacy fuel charge card providers make it difficult for operators to track expenses on a vehicle by vehicle, geographic, and fleet-level basis.
For most charge-card providers, the end-user experience is not even part of the question. Many legacy providers require drivers to refuel at specific stations that are “in-network”, regardless of if those gas stations are on the route or completely out of the way. Similarly, many providers have old-school expense reimbursement systems where drivers need to physically submit their fuel receipts at the end of their journey — a process that is asking for lost or damaged receipts.
How is Coast different?
Recently, Coast teamed up with Visa to launch a Visa Fleet card program, so that Coast Visa Fleet cardholders could make payments at North American merchants wherever Visa is accepted. This collaboration allows drivers to use the card to purchase fuel wherever it is sold. Additionally, Coast also offers a 2¢ rebate for customers for every gallon that they buy. This, along with the product’s intuitive digital dashboard eliminates the need for paper receipts, and allows for fleet geo-routing. Lastly, Coast provides fleet managers with permissions to allow drivers to pay for additional business expenses while on the road, like parking, maintenance, lodging, and more, all managed through a single platform.
In terms of the company's revenue model, Coast earns interchange fees from the merchant when its customers use the Coast card to make purchases. Additionally, Coast charges customers a flat subscription fee of $2 per month per employee who uses the card to make payments that month.
Market Opportunity
Once a fleet reaches a size of more than just a few vehicles, traditional small business credit cards are no longer sufficient for commercial fleet operators, mainly because they lack the line-item level security, visibility, and additional controls necessary for a mobile workforce. Aside from being the perfect wedge into vertical logistics software, 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.
What’s perhaps simultaneously most intriguing and obvious is that fuel payments are at the core of all logistics — the darlings of shipping and logistics all rely on fuel to function. Whether it be DHL, Fedex, or Amazon, every truck, boat, and plane requires fuel to deliver customer value.
Moreover, there’s recently been a lot of progress in the shipping and logistics world. Startups like Convoy have created a digitally enabled freight forwarding marketplace to connect shippers and suppliers, while Flexport reinvented global shipping & logistics visibility. However, while both of these services provide business-level visibility and financial savings, the core operating pillars of shipping and logistics remain: get the package from point A to point B in a timely manner. The common denominator? Transportation vehicles, drivers/operators, and fuel.
Why I like the company
The incumbent technologies that cater to these customers are decades old and lack the digital tooling to make for value-add experiences. The drivers and fleets deserve modern, digitized tools to allow them to do their best work, while the business requires affordable and transparent financial services products to oversee operations and deliver on customer needs.
Additionally, cards have proven to be a strong wedge into higher-value software solutions. Companies like Brex, Ramp, and TripActions have validated that cards can provide end-users with immediate customer value by tilting the value proposition in favor of the customers instead of the vendor. Once the card benefits (e.g., savings, points, fuel availability) are realized by employees and businesses, vendors can upsell customers with additional software functionality like spend management, operational oversight into fleet performance through telematics, fleet scheduling, and more. Coast is looking like a strong favorite for becoming the operating system for commercial fleets.
Lastly, CEO Daniel Simon previously co-founded consumer finance startup Bread, which sold to Alliance Data Systems for over $500 million in 2020. Working for a proven founder with a strong exit helps justify the problem space. Additionally, he wants to bring the “same sort of ease of use and transparency that Bread brought to e-commerce consumers and retailers to a category of business and employee that is often overlooked in tech.”
Coast’s Hiring Corner
Similar Companies
Reminder
As always, you can find the abbreviated list of companies we’ve already talked about here. Below are links to the previous posts