There’s a new fintech unicorn in town.
Danish start-up Pleo, which sells corporate expense management software and linked “smart” payment cards, has boosted its valuation to $1.7 billion in a $150 million equity financing round.
The investment, led by Bain Capital Ventures and Thrive Capital, makes Pleo the latest privately-held tech company in Europe to surpass the coveted $1 billion “unicorn” valuation.
“The whole digitization and automation of finance processes has been going on for a while,” Jeppe Rindom, CEO and co-founder of Pleo, told CNBC in an exclusive interview.
Pleo makes about 70% of its revenue from interchange fees taken from a merchant’s bank account every time a customer uses their card. The other main chunk of the company’s sales comes from paid subscriptions.
The coronavirus pandemic has been an “accelerator” for Pleo, Rindom said, adding that the working-from-home trend offset a decline in international business travel. The company’s customer base more than doubled over the course of 2020 to 17,000, he said.
Following the investment, Bain Capital Ventures’ Keri Gohman will join Pleo’s board. Gohman previously held executive positions at accounting software provider Xero and U.S. bank Capital One.
Pleo is also a rare example of a billion-dollar tech company emerging in Denmark. Pleo’s founders were early employees at Tradeshift, a $1.1 billion fintech that was originally based in Copenhagen but relocated to San Francisco.
Fintech is on fire
Several fintech start-ups have raised funds at staggeringly high valuations lately.
Sweden’s Klarna was valued at $45.6 billion in a round led by SoftBank. Checkout.com raised hundreds of millions of dollars at a $15 billion valuation in January. Meanwhile, a relatively little-known payments software company called Mollie raised money at a $6.5 billion value only a couple 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 which are moving into double-digit billion valuations.”
“If you compare it to the value of the whole banking industry, it’s still very small,” he added. “This is going to take time — we’re talking about a couple of decades. But I do think that the players that are customer-first and technology-first will win the whole financial industry in the long run.”
With its latest cash infusion, Pleo has raised $228.8 million to date. The firm plans to use the fresh funds to boost its presence in countries like the U.K. and ramp up marketing and PR. Pleo’s main markets are currently Denmark, Sweden, Germany, Spain, Britain and Ireland.
The business is not yet profitable, and Rindom said he’s not aiming for profitability any time soon. Many venture-backed start-ups focus on rapid growth over making money. Rindom said Pleo is growing fast, and was currently on track to hit $100 million in annual recurring revenue.
Further down the line, Pleo — which solely operates in Europe — is considering an expansion into another continent. Rindom said the U.S. was a contender but no firm decisions had been made.
Pleo has been expanding its range of products to include features like invoice management and employee reimbursement. Rindom said the company also planned to roll out lending at some point, following in the footsteps of fintechs such as Square and Stripe which have also moved into credit.