Whether you are part of the accounting department, or just any employee at an organization, managing expenses can be a time-consuming and error-filled, yet also quite mundane, part of your job. Today, a startup called Pleo — which has built a platform that can help some of that work more smoothly, by way of a vertically integrated system that includes payment cards, expense management software, and integrated reimbursement and pay-out services — is announcing a big round of growth funding to expand its business after seeing strong traction.
The Copenhagen-based startup has raised $150 million — money that it will be using to continue building out more features for its users, and for business development. The round, which sets a record for being the largest Series C for a Danish startup, values Pleo at $1.7 billion, the startup has confirmed.
There are around 17,000 small and medium businesses now using Pleo, with companies at the medium end of that numbering around 1,000 employees. Now with Pleo moving into slightly larger customers (up to 5,000 employees, CEO Jeppe Rindom, said), the startup has set an ambitious target of reaching 1 million users by 2025, a very lucrative goal, considering that expenses management is estimated to be a $80 billion market in Europe (with the global opportunity, of course, even bigger).
It will also be using the funds simply to expand its business. Pleo has around 330 employees today spread across London, Stockholm, Berlin and Madrid, as well as in Copenhagen, and it will be using some of the investment to grow that team and its reach.
Bain Capital Ventures and Thrive Capital co-led this round, a Series C. Previous backers, including Creandum, Kinnevik, Founders, Stripes and Seedcamp, also participated. Stripes led the startup’s Series B in 2019. It looks like this round was oversubscribed: the original intention had been to raise just $100 million.
Like other business processes, managing expenses and handling company spending has come a long way in the last many years.
Gone are the days where expenses inevitably involved collecting paper receipts and inputting them manually into a system in order to be reimbursed; now, expense management software links up with company-issued cards and taps into a range of automation tools to cut out some of the steps in the process, integrating with a company’s internal accounting policies to shuffle the process along a little less painfully. And there are a number of companies in this space, from older players like SAP’s Concur through to startups on the cusp of going public like Expensify as well as younger entrants bringing new technology into the process.
But, there is still lots more room for improvement. Rindom, Pleo’s CEO who co-founded the company with CTO Niccolo Perra, said the pair came up with the idea for Pleo on the back of years of working in fintech — both were early employees at the B2B supply chain startup Tradeshift — and seeing first-hand how short-changed, so to speak, small and medium businesses in particular were when it came to tools to handle their expenses.
Pleo’s approach has been to build, from the ground up, a system for those smaller businesses that integrate all the different stages of how an employee might spend money on behalf of the company.
Pleo starts with physical and virtual payment cards that are issued by Pleo (in partnership with MasterCard) to buy goods and services, which in turn are automatically itemized according to a company’s internal accounting systems, with the ability to work with e-receipts, but also let people use their phones to snap pictures of receipts when they are only on paper, if required. This is pretty much table stakes for expense software these days, but Pleo’s platform is going a couple of steps beyond that.
Users (or employers) can integrate a users’ own banking details to make it easier to get reimbursed when they have had to pay for something out of their own pocket; or conversely to pay for something that shouldn’t have been charged on the card. And if there are invoices to be paid at a later date from the time of purchase, these too can be actioned and set up within Pleo rather than having to liaise separately with an accounts payable department to get those settled.
Pleo also has built fraud protection services into the platform to detect, for example, cases when a card number might have been compromised and is being used for non-work purposes.
What’s notable is that the startup has built all of the tech that it uses, including the payments feature, from the ground up, to have full control over the features and specifically to be able to add more of them more flexibly over time.
“In the beginning we ran with a partner in services like payments, but it didn’t allow us to move fast enough,” Rindom said in an interview. “So we decided to take all of that in-house.”
It seems like this opens the door to a lot of possibilities for how Pleo might evolve in the years ahead now that it’s focused on hyper-growth. However, Rindom added that whatever the next steps might be, they will remain focused on continuing to solve the expenses problem.
“When it comes to our infrastructure we use it only for ourselves,” he said. “We have no plans of selling [for example, payments] as a service, even if we do have a lot of other ideas for broadening our offerings.” Indeed, the ability to pay invoices was launched only in April of this year. “We come up with things all the time, but will launch only those relevant to customers.” For now, at least.
That focus and perhaps even more than that the execution and customer traction are what have brought investors around to backing a fintech out of Copenhagen.
“The future of work empowers employees with the tools they need to be effective, productive, and successful,” said Keri Gohman, a partner at Bain Capital Ventures, in a statement. “Pleo understands this critical shift for modern companies toward employee centricity—providing workers with a fun-to-use spend management app that automatically tracks their corporate spending and generates expense reports, paired with the powerful tools businesses need to create full visibility and management of every penny spent.”
Bain has been a pretty active investor in European fintech, also backing GoCardless in its recent round. “BCV invests in founders who aren’t afraid to tackle big problems, and Jeppe and Nicco saw a big challenge that employers faced—tracking all corporate spending and reconciling expenses back to the general ledger—and solved it with elegant technology that both employers and employees love,” added Merritt Hummer, a partner at Bain Capital Ventures.
Thrive is also a notable backer here, and it will be interesting to see how and if Pleo links up with others in the VC’s portfolio, which include companies like Plaid, Gong and Trade Republic.
“Pleo has already transformed the way that over 17,000 companies think about managing their expenses, saving them time and lowering costs while increasing transparency,” noted Kareem Zaki, a general partner at Thrive Capital, in a statement. “We are excited to partner closely with the Pleo team to help drive their next phase of growth.”