Divvy

Alex Bean's journey to founding Divvy began not in a startup incubator but managing a scooter company called Lucky. In his mid-20s, he took over operations when the owner fell ill, leading a small team of 10 riders traveling to tournaments and trade shows worldwide. The pain point was clear: when sending seven employees to a Vegas conference with a $15,000 budget, everyone used personal cards, expense reports arrived a month and a half late, and the company consistently went over budget without knowing it. "Divvy would have solved that entirely," Alex reflected. This experience planted the seed that would become his fintech empire.

In 2017, Alex partnered with Blake, who brought both the original concept and initial capital to kickstart the company before raising formal venture funding. Their approach was distinctly non-technical: they built it as business owners, not engineers, designing features they personally needed from running multiple companies. Blake and Alex formed an unequal partnership—Blake as "quarterback" and Alex as "running back"—but both understood their respective roles were critical. They raised their first formal round of $10 million from Paleon Partners in 2018, giving them the resources to build what would become a four-pillar platform: corporate cards, spend management, expense management, and AP automation.

Divvy's go-to-market was unconventional: offer the software entirely free to SMBs (businesses with 1-500 employees), monetizing exclusively through credit card interchange fees. This freemium model required confidence in unit economics—if processing $1B+ in annual spend across thousands of customers at even 70-100 basis points net (after rewards, risk reserves, and COGs from the standard 200-300 basis points), the math worked. By 2019, they had crossed 1,000 customers. By 2020, that doubled to 4,500. The product's sticky nature—once SMBs set up virtual cards and budgets, switching costs became prohibitively high—drove exceptional churn metrics: under 5% annually on a completely free product.

The secret to Divvy's growth wasn't paid acquisition or viral loops—it was product-led growth underpinned by unit economics that actually worked. Once customers implemented budgets and virtual cards, migration friction locked them in. Churn stayed below 5% annually because switching meant abandoning the budget-driven financial workflows they'd adopted. Alex acknowledged a looming challenge: direct competitors like Brex had higher valuations and early credit card innovation, but Divvy had innovated harder on software features like budgets. By 2024, with billions in spend flowing through the platform, Divvy had proven the model: you could give software away free and still build a massive, profitable fintech business if your unit economics were defensible.

In 2024, Divvy closed a Series D at $165M valuation, bringing on prominent investors like Hanukkah and Will Rock. They now serve over 10,000 SMB customers and are growing at 100% year-over-year—both in customer count and revenue. Alex expressed confidence in breaking $100M in ARR within two years. The company continues to innovate within their four-pillar framework: AP automation (where they're launching premium speed features), credit products (loans in beta), and expansion into adjacent services. Their motto—"spend smarter"—resonates with their core market: the mom-and-pop businesses of America, not just VC-backed startups.