The Fintech Pleo start-up valued at $ 1.7 billion in a new funding round

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The Pleo app pictured on a smartphone alongside one of the fintech company’s corporate cards.

Pleo

LONDON – There’s a new fintech unicorn in town.

Danish start-up Pleo, which sells business expense management software and “smart” payment cards, increased its valuation to $ 1.7 billion in a $ 150 million funding round .

The investment, led by Bain Capital Ventures and Thrive Capital, makes Pleo the latest private tech company in Europe to surpass the coveted $ 1 billion “unicorn” valuation.

“The whole digitalization and automation of financial processes has been going on for quite some time,” Jeppe Rindom, CEO and co-founder of Pleo, told CNBC in an exclusive interview.

Pleo derives around 70% of its revenue from interchange fees taken from a merchant’s bank account each time a customer uses their card. The other large portion of the company’s sales come from paid subscriptions.

The coronavirus pandemic has been an “accelerator” for Pleo, Rindom said, adding that the trend of working from home was offsetting a drop in international business travel. The company’s customer base more than doubled during 2020 to reach 17,000, he said.

Following the investment, Bain Capital Ventures’ Keri Gohman will join Pleo’s board of directors. Gohman previously held senior positions at accounting software provider Xero and US bank Capital One.

Pleo is also a rare example of a billion dollar tech company emerging in Denmark. The founders of Pleo were the first employees of Tradeshift, a $ 1.1 billion fintech that was originally based in Copenhagen but moved to San Francisco.

FinTech is on fire

Lately, several fintech start-ups have raised funds at incredibly high valuations.

Sweden’s Klarna was valued at $ 45.6 billion in a round led by SoftBank. Checkout.com raised hundreds of millions of dollars for a valuation of $ 15 billion in January. Meanwhile, a relatively little-known payment software company called Mollie raised $ 6.5 billion in funds just a few weeks ago.

“I think we’ve only seen the beginning,” Rindom said. “Obviously we have some awesome players like Wise, Revolut, Adyen and Klarna, some of whom are moving towards double-digit valuations in the billions.”

“If you compare it to the value of the whole banking industry, it’s still very small,” he added. “It’s going to take time – we’re talking about 20 years. But I think the players who are customer-first and technology-driven will win over the entire financial industry in the long run.”

Expansion projects

With its latest cash injection, Pleo has raised $ 228.8 million to date. The company plans to use the new funds to strengthen its presence in countries like the UK and accelerate marketing and public relations. Pleo’s main markets are currently Denmark, Sweden, Germany, Spain, Great Britain and Ireland.

The business is not yet profitable and Rindom said he is not aiming for profitability anytime soon. Many venture-funded start-ups focus on growing quickly rather than making money. Rindom said Pleo is growing rapidly and is currently on track to hit $ 100 million in annual recurring revenue.

Later, Pleo – which operates only in Europe – is considering expansion to another continent. Rindom said the United States was a competitor but no firm decision had been made.

Pleo has expanded its product line to include features such as invoice management and employee reimbursement. Rindom said the company also plans to roll out loans at some point, following in the footsteps of fintechs such as Square and Stripe who have also gone on credit.


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