The Pleo app on a smartphone next to one of the fintech company’s corporate cards.
LONDON – There’s a new fintech unicorn in town.
Danish start-up Pleo, which sells business expense management software and linked “smart” payment cards, has increased its valuation from $ 150 million to $ 1.7 billion in an equity financing round.
The investment, led by Bain Capital Ventures and Thrive Capital, makes Pleo the newest private technology company in Europe to surpass the coveted “unicorn” valuation of $ 1 billion.
“The entire digitization and automation of financial processes has been going on for some time,” Jeppe Rindom, CEO and co-founder of Pleo, told CNBC in an exclusive interview.
Pleo makes about 70% of its revenue from interbank fees, which are debited from a merchant’s bank account every time a customer uses their card. The other major portion of the company’s revenue comes from paid subscriptions.
The coronavirus pandemic has been an “accelerator” for Pleo, Rindom said, adding that the trend to work from home has offset a decline in international business travel. The company’s customer base more than doubled to 17,000 over the course of 2020, he said.
Following the investment, Keri Gohman of Bain Capital Ventures will join Pleo’s board of directors. Gohman previously held management positions at accounting software provider Xero and US bank Capital One.
Pleo is also a rare example of a multi-billion dollar tech company popping up in Denmark. Pleo’s founders were early employees at Tradeshift, a $ 1.1 billion fintech that was originally based in Copenhagen but moved to San Francisco.
Several fintech startups have recently raised funds to amazingly high ratings.
Sweden’s Klarna was valued at $ 45.6 billion in a round led by SoftBank. Checkout.com raised hundreds of millions of dollars on a valuation of $ 15 billion in January. Meanwhile, a relatively little-known payment software company called Mollie raised $ 6.5 billion in cash just a few weeks ago.
“I think we only saw the beginning,” said Rindom. “Of course we have some great players like Wise, Revolut, Adyen and Klarna, some of whom are worth tens of billions of dollars.”
“If you compare it to the value of the entire banking sector, it’s still very small,” he added. “This will take time – we’re talking about a couple of decades. But I think the players who put customers and technology first will win over the entire financial industry in the long run. “
With its latest cash injection, Pleo has raised $ 228.8 million so far. The company plans to use the fresh funds to strengthen its presence in countries like the UK and to step up marketing and PR. Pleo’s main markets currently are Denmark, Sweden, Germany, Spain, Great Britain and Ireland.
The business isn’t profitable yet, and Rindom said he wasn’t aiming for profitability anytime soon. Many venture capital backed startups focus on fast growth rather than money making. Rindom said Pleo is growing rapidly and is currently well on its way to reaching $ 100 million in annual sales.
Later, Pleo, which operates exclusively in Europe, considers expanding to another continent. Rindom said the US is a contender but no firm decisions have been made.
Pleo has expanded its product range to include functions such as invoice management and employee refunds. Rindom said the company also planned to roll out lending at some point, following in the footsteps of fintechs like Square and Stripe, who have also gotten into the lending space.