Hillhouse, Tencent lead Series C for China's Fenbeitong

Several existing investors re-upped, among them IDG Capital, Ribbit Capital, Eight Roads Ventures, and Glade Brook Capital. Fenbeitong has now raised more than RMB1 billion ($154 million) across four funding rounds.

The company drew its inspiration from US start-ups Bex and Divvy, which brought together front-end payment and back-end expense management by offering expense control systems plus corporate credit cards. TripActions took this two-in-one model and made it three-in-one with the addition of business travel agency services. All three companies became unicorns within five years.

Fenbeitong describes corporate expense management in China as being a generation behind consumer-facing financial technology applications, characterized by multiple systems and complicated processes. It claims to have pioneered the three-in-one model locally, offering a fully integrated and automated product, effectively reducing the manual burden on finance departments.

Companies can pre-set expense standards, budgets, and approval flows, while the payments infrastructure is integrated with more than 150 hotel groups, restaurant chains, and travel agencies. Payments can be made via app, online banking, or a virtual credit card that is bundled with a WeChat or Alipay account.

Fenbeitong said that its gross merchandise value (GMV) fell to almost zero at the height of the COVID-19 in China as companies were unable to conduct business normally and business travel ceased. However, the pandemic also served as a wake-up call to businesses about the importance of digitalizing internal systems and processes.

By the middle of 2020, activity had not only recovered to pre-COVID-19 levels, but it was on the way to a new record high. Fenbeitong claims its revenue has increased three-fold over the past two years, and annual GMV is now RMB2.5 billion.

Meanwhile, the company’s approach to monetization has evolved. While most software-as-a-service (SaaS) start-ups charge annual fees to enterprise customers, Fenbeitong receives commissions from vendors on a per-transaction basis. It has also started collaborating with banks to launch online payment products. These two sources of income account for more than one-third of total revenue.

The company is working with several banks on integrating its services with the bank accounts of corporates and employees. The new funding will go towards long-term strategic initiatives like these as well increasing headcount. Fenbeitong wants to double the size of its product development team over the next three months.

Fenbeitong has built a next-generation corporate expense management ecosystem,” said Danying Ma, a managing director at Tencent Investment. “On one hand, it offers efficient and convenient expense management, removing a pain point for many small and medium-sized enterprises. On the other, it improves the reimbursement experience of corporate employees.”

Founded in 2016 by Xi Lan, formerly of IDG, Fenbeitong raised RMB70 million in Serie A funding across two tranches in 2016 and 2017. Both were led by IDG. Bojiang Capital then led a RMB85 million Series B in 2018. A Series B extension of $36 million closed about 12 months ago, with Ribbit, Eight Roads, and Glade Brook taking the lead.

Other Chinese expense management SaaS businesses that have received VC funding include Ekuaibao and Huilianyi. The latter covers the entire expense process, from payment through bookkeeping, but stops short of the front-end payment element. Speaking to AVCJ last year, Huilianyi CEO Changzheng Zhang questioned whether the super app model makes sense.

“If there were no Ctrip, Didi, or Meituan-Dianping, an enterprise purchase app would be awesome, but it’s not the case. In addition, a super app might provide a better purchase experience for front-end staff, but it is the financial department that decides to implement a SaaS solution. We must solve their pain points first,” he said.

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• Topics
• Greater China
• Financials
• Technology
• Support services
• China
• enterprise software
• Tencent
• Hillhouse Capital Management
• Ribbit Capital
• Eight Roads
• IDG capital