Whether you’re part of the accounting department or just an employee of an organization, managing expenses can be a time-consuming and error-prone, but also a fairly mundane part of your job. Today, a startup called Pleo – which has built a platform that can help some of this work more smoothly, via a vertically integrated system that includes payment cards, expense management software, and integrated reimbursement and payout services – announced a major round of growth funding to be Expanding business after seeing strong pull.
The Copenhagen-based startup has raised $ 150 million – money it will use to build more capabilities for its users and business development. The round, which sets a record as the largest Series C for a Danish startup, valued Pleo at $ 1.7 billion, the startup has confirmed.
Around 17,000 small and medium-sized companies currently use Pleo, with companies employing around 1,000 people at the middle end. Now that Pleo has reached slightly larger customers (up to 5,000 employees, said CEO Jeppe Rindom), the startup has set an ambitious goal of reaching 1 million users by 2025, a very lucrative goal considering spending management as an 80 billion dollar market in Europe (with the global opportunity even greater, of course).
She will also simply use the funds to grow her business. Pleo now employs around 330 people in London, Stockholm, Berlin and Madrid, as well as Copenhagen, and will use some of the investment to expand this team and its reach.
Bain Capital Ventures and Thrive Capital co-led this round, a Series C. Previous supporters including Creandum, Kinnevik, Founders, Stripes and Seedcamp also attended. Stripes led the startup’s Series B in 2019. It looks like this round was oversubscribed: the original intent was to raise only $ 100 million.
As with other business processes, managing expenses and handling corporate expenses has evolved over the past few years.
Gone are the days when expenses inevitably required the collection of paper receipts and manual entry into a reimbursement system; Now the expense management software connects to company-issued cards and accesses a range of automation tools to avoid some of the steps in the process and integrates with a company’s internal accounting policies to make the process a little less painful. And there are a number of companies in this space, from older players like Concur from SAP to startups on the cusp of going public like Expensify, as well as younger market players bringing new technology into the process.
But there is still a lot of room for improvement. Rindom, CEO of Pleo, who co-founded the company with CTO Niccolo Perra, said the pair came up with the idea for Pleo after years of working in the fintech industry – both of whom were early employees at the B2B supply chain startup Tradeshift – and saw first – On the other hand, how tight small and medium-sized companies in particular were, so to speak, when it came to tools for processing their expenses.
Pleo’s approach has been to build a system from the ground up for smaller businesses that integrates all of the different stages at which an employee could spend money on behalf of the company.
Pleo starts with physical and virtual payment cards (which can be used in Apple Wallet, for example) issued by Pleo (in partnership with MasterCard) to purchase goods and services, which in turn are automatically broken down according to a company’s internal accounting systems, with the ability to work with electronic receipts but also giving users the ability to use their phones to take pictures of receipts when needed when they are only on paper. This is pretty much a lot for expense software these days, but Pleo’s platform goes a few steps beyond that.
Users (or employers) can integrate the user’s own bank details to facilitate reimbursement if they had to pay for something out of their own pocket; or, conversely, to pay something that should not have been charged on the card. And if invoices have to be paid at a later point in time from the time of purchase, they can also be edited and set up in Pleo instead of having to contact an accounts payable department separately to settle them. Higher tariffs (beyond the basic service for up to five users) also allow a company to set spending limits for individual users. The price depends on the number of users per month.
Pleo has also built fraud protection services into the platform, for example to identify cases where a card number may have been compromised and is not being used for professional purposes.
What’s noteworthy is that the startup built all of the technology it uses, including the payments feature, from the ground up to have full control over the features, and especially to be able to add more of them with greater flexibility over time.
“At first we worked with a partner for services like payments, but it didn’t allow us to act quickly enough,” said Rindom in an interview. “That’s why we decided to do all of this internally.”
It seems that this opens the door to many ways Pleo could perform in the years to come, as it focuses on hyper-growth. However, Rindom added that regardless of the next steps, they will focus on continuing to resolve the spending problem.
“We only use our infrastructure for ourselves,” he says. “We have no sales plans” [for example, payments] as a service, even if we have many other ideas for expanding our offer. ”In fact, the option to pay bills was only introduced in April of this year. “We are constantly coming up with things, but only bring those on the market that are relevant for customers.” At least for the time being.
This focus and perhaps even more so the implementation and customer loyalty have led investors to support a fintech from Copenhagen.
“The future of work gives employees the tools they need to be effective, productive and successful,” Keri Gohman, partner at Bain Capital Ventures, said in a statement. “Pleo understands this shift towards employee centricity, which is crucial for modern companies – by providing employees with a fun spend management app that automatically tracks their company expenses and creates expense reports, coupled with the powerful tools companies need to be completely transparent and manage every cent spent. “
Bain has been a fairly active investor in European fintechs and also backed GoCardless in its most recent round. “BCV invests in founders who are not afraid to tackle big problems, and Jeppe and Nicco saw a major challenge for employers – keeping track of all company expenses and returning expenses to the ledger – and solved it with elegant technology that both employers and employees, ”added Merritt Hummer, partner at Bain Capital Ventures.
Thrive is a notable supporter here too, and it will be interesting to see how and if Pleo connects with others in the VC’s portfolio, which include companies like Plaid, Gong and Trade Republic.
“Pleo has already changed the way over 17,000 companies think about spending management, saving them time and money while increasing transparency,” said Kareem Zaki, general partner at Thrive Capital, in a statement. “We look forward to working closely with the Pleo team to drive the next phase of growth.”