Sounds crazy, right? Well, it is very common among employees to splurge on expense accounts because there has not been an incentive to be frugal until now. A new startup named TravelBank designed an application that can predict spending amounts for employees on trips, help with filing their expenses, and offer them cash rewards if they do not spend all their budget. TravelBank has raised a $10 million Series A round led by NEA and joined by Accel. TravelBank was co-founded by Duke Chung, who already created and sold a customer service startup, Parature, to Microsoft for $100 million.
“The way I look at entrepreneurship is that I like the categories that every company must have” says Chung. “And every company needs an expense product. It’s a basic function, and there’s huge opportunities to create something better.”
While there have been other products like TravelBank’s, the other company’s such as Concur have focused on designing these applications for Fortune 5000 companies. TravelBank is targeting small to medium businesses. At first TravelBank will be free, though it does have plans to monetize but no concrete plans on how to do this. The ideas that are possibly floating around are charging per-seat or a portion of savings.
“Expense management has been a very sleepy space. Maybe because it’s boring it doesn’t attract a lot of talent or innovation. It’s not perceived as a sexy category so there’s only a few competitors. I view that as an opportunity” Chung tells TechCrunch.
A large portion of the $10 million raised will be spent on marketing and sales for the newly launched apps. However, it benefits from the bottom-up distribution process like Dropbox and the fact that the app is starting free.
By simply taking photos and uploading them onto the app, any employee can sign up and use TravelBank to submit expenses and process their reimbursements. The app will integrate with business software such as QuickBooks, Bill.com, or NetSuite. TravelBank can export expenses as PDFs for easy use with some legacy expense systems.
One of the coolest features of the app is that if an entire company gets on TravelBank, their employers can trigger a rewards feature that estimates what employees should pay for flights, car rentals, hotels, and meals based on real-time prices. Therefore, if employees are economical, they can receive some of that unused cash as a thank you for saving the company money.
The second-biggest controllable spending item for companies is travel and entertainment globally. $1.2 trillion is spent on these categories each year.
“We found that people increasingly become more excessive when it came to business spending” Chung tells me. “When we knew all the employees and they knew us, they were more frugal, with the startup mentality. But as a company grows and you don’t get to know all the employees as well, you see some breakage and it gets worse of over time with abuse and excessive spending. There was no way to regulate that”, so Chung says he was inspired to build TravelBank to enhance management visibility.
Not to say that spending money to wine and dine a client is not valid and a smart strategy, and therefore the app lets you exempt spending on clients from your budget.
TravelBank can make employees more efficient. While before employees might have flown up to New York to have a single dinner meeting, now they end up holding breakfast, lunch, and dinner meetings with the clients. They do this to exclude those costs which allows them to come in further under budget, and get a bigger reward while squeezing more value out of their trip.
TravelBank will have to convince small businesses to switch to this standardized app and ditch spreadsheets, emails, and haphazard receipt. It will be hard, but if it can address a business problem that other enterprise developers have not attacked, it could help companies apply their capital to important matters while turning employees from selfish spenders into thrifty team members.