Danish startup Pleo, a developer of expense management tools aimed at SMBs to let them issue company cards and better manage how employees spend money, has picked up a large tranche of funding to help it double down on its business at a time of strong growth.
The company has raised $200 million, money that Jeppe Rindom, Pleo’s co-founder and CEO, said it will be using in areas like M&A, picking up the pace on expanding to new countries, bringing more functionality into its core product and generally expanding its presence as a key enabler of “the future of work” — a massive theme at the moment in the world of business, given the changes so many were compelled to make in the wake of the COVID-19 pandemic.
(The news, in fact, is coinciding with Pleo holding “Forward,” a virtual conference on that very topic.)
Indeed, while some areas of company spend like business travel and entertainment (e.g. business lunches) have all but stopped for many, the actual need for companies to better manage how and where money is spent by employees is in reality greater than ever before, given the distributed way that many of us are working today.
“The relevance of tooling to allow workforces to work in smooth ways while being distributed is very high right now,” Rindom said in an interview. “You may not be going out as much, but distributed workers need access to funds for a piece of software, or a subscription, or something else. Previously it’s been easy to, say, borrow a card from a manager or the finance team to handle this. But you can’t do that anymore. Our product has become increasingly relevant for that reason.”
New investor Coatue Management is leading this funding, with strong participation from Alkeon Capital. Previous backers Bain Capital Ventures, Thrive Capital, Creandum, Kinnevik, Founders, Stripes and Seedcamp also participated.
Notably, the cash injection is coming just six months after Pleo raised $150 million. At the time, that round in July was the largest-ever Series C for a Danish startup. This latest funding is actually an extension of that round, bringing the total for the Series C to $350 million. The valuation in the meantime has also shot up: six months ago, Pleo was valued at $1.7 billion; now it is $4.7 billion, making it one of the more valuable fintech startups in Europe.
The reason for the fast funding — which started as an unsolicited offer, Rindom said — is due to a few different factors.
First, there is Pleo’s growth. The company now has over 20,000 customers — up by more than 3,000 in the last six months, and currently is averaging 1,000 new customers per month — in the six countries where it is now live: Denmark, Sweden, Germany, Spain, Ireland and the U.K. The plan is next to open up for business in 14 more countries, starting with Austria, and followed by Finland, the Netherlands, France and Portugal; and to ramp up hiring beyond the 400 that currently work for Pleo.
“We already had very ambitious plans, to bring Pleo to all of Europe in the next one and a half years,” Rindom said. The company aims to have 1 million users by 2025.
The second reason is the company’s relevance to how people are working today, and the fact that the businesses that Pleo is targeting — as small as just a few employees, and most recently up to about 5,000, still “medium” in the world of enterprise — have never really had great products to address expenses needs.
Indeed, many companies building products like these have mainly focused on large enterprises as customers. (That is changing fast, though: another big player in the same space as Pleo, Soldo, raised $180 million this year, too.) Pleo’s tools today include card issuing, invoice payments and out of pocket expenses, integrating all of this with existing accounting packages to help money management run more smoothly. Pricing starts at a free and limited tier for the smallest customers up to five users, working up to £10 per person per month for bigger customers, as well packages designed for the largest users.
The third reason for Pleo’s raise right now is one of venture money at the moment. VCs, working hard to deploy massive funds, are continuing to hunt very aggressively for the best opportunities in the market. Their focus is not just to fund companies just as activity is picking up, but to back those that have demonstrated good growth during even the leaner periods.
“We were impressed by how Pleo has already redefined the way that over 20,000 companies think about managing their expenses, saving them time and lowering costs while increasing transparency,” said Michael B. Gilroy, general partner of Coatue Management, in a statement. “We are proud to partner closely with Jeppe and the rest of the team to help drive their next phase of growth — as they continue to extend across Europe and work to transform how spend management works within businesses.”
“Europe is emerging as an important technology hub in both the public and private markets, as evidenced by the increase in venture capital activity across the continent,” added Deepak Ravichandran, general partner of Alkeon Capital. “Pleo is building the leading B2B spend management platform in Europe, driven by a best-in-class user experience and rapid product innovation. We look forward to working with Jeppe and the team as the business continues to accelerate and grow.”
“In July, we recognized that the future of work must empower employees with the tools they need to be effective, productive, and successful. 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,” added Bain partner Keri Gohman. “With this extension to the Series C, Pleo is in an even stronger position — they’re undeniably the dominant player in small business spend management, an $80B+ opportunity in Europe alone, and will only grow more essential to businesses as the company expands into bill payments in the near future.”