Ramp hits $44 billion valuation as companies look to rein in AI spend
Corporate America is trying to figure out how to rein in rising AI spending. This helps payment software giant Ramp.
The expense management company announced a $750 million financing round on Thursday at a $44 billion valuation. The tour was managed by ICONIQ. GIC And Ontario Teachers’ Pension Planand represents a roughly 38% increase in Ramp’s valuation.
The New York-based company has surpassed $1 billion in annual revenue with positive free cash flow, according to CEO Eric Glyman. The growth is driven in part by enterprise customers grappling with AI spending consuming a larger share of budgets.
“We found that tokens cost a lot of money, and most CFOs not only don’t plan for that (steep growth) in their annual plans, but they don’t have great tools to manage it,” Glyman said in an interview with CNBC on Thursday. “Suddenly the third pillar has emerged; spending through tokens and intelligence. This is not a clean area of spending.”
Eric Glyman and Karim Atiyeh, co-founders of corporate card startup Ramp
Ramp now has a product to help customers manage their AI spend. It helps companies direct AI models to perform tasks that can be done at a fraction of the cost. For CFOs, that price often comes in the form of being paid in “tokens,” units that AI companies use to measure usage.
Glyman said CFOs are often surprised by how much they actually spend.
“People say this is the biggest opportunity we’ve had in our career to grow our business, but it’s still the fastest growing product line,” he said. “The problem is that most companies use frontier models, this state-of-the-art intelligence for everything. … Don’t get me wrong, you may want to have super-advanced intelligence to run your most critical analysis, but you may not need it to organize your email.”
There is also the issue of return on this expenditure.
Glyman said those spending the most on AI saw the biggest increases in revenue, and some saw “phenomenal returns on investment.” But the returns are generally for companies that spend effectively on AI.
Glyman said that among the 70,000 businesses using Ramp, those that spent most of their revenue on AI increased their revenue by 12%. Those who spent the least recorded steady growth.
For now, these expenses do not come at the expense of software budgets.
“Despite the movement in the stock market, we have yet to see software spending,” Glyman said. “It continues to grow, but I think the bill will come due.”
Leading model companies like OpenAI and Anthropic have no reason to push people toward a cheaper option, Gylman said.
“They have no incentive to tell people you know the task you want to do. It’s possible to do it at 1/100 the cost,” he said. “Your incentive is really to maximize revenue and profit, and so I think that’s led to the rise of companies like Ramp that can help companies bring in those token spend and controls, but also AI native companies that are making sourcing decisions to direct the mission to the most cost-effective option.”
He also touched on “tokenmaxxing,” an approach where developers use as many tokens as possible. Some companies use this as an indicator of efficiency, but the problem is that more tokens do not mean more value.
“I think it’s the twilight moment of tokenmaxxing,” he said, adding that companies are smart by that measure. “I think the tokenmaxxing era is coming to an end.”
