Financial technology startup Pleo Technologies Ltd. today said that it has secured a $150 million funding round to grow its share of the corporate expense management market.

The round, which was co-led by Bain Capital Ventures and Thrive Capital, gives the Denmark-based startup a valuation of $1.7 billion.

Pleo provides a set of financial products that companies can use to reduce the amount of time their employees spend on creating expense reports. The startup’s main product is a service that enables firms to issue corporate payment cards to staffers. When an employee uses their Pleo-issued corporate card to make a work-related purchase, the transaction is automatically synchronized to their company’s accounting system, which removes the need for the employee to manually create an expense report. 

Pleo also provides tools to reduce the amount of time involved in recording cash-based purchases. For travel expenses, the startup provides an app that allows users to mark the starting point and destination of a trip on a digital map, then have the fuel costs calculated automatically. The app thereby makes it possible to send expense reimbursement requests to the accounting team without having to perform any manual calculations.

For accounting teams, in turn, Pleo provides a tool that automates some of the work involved in paying recurring invoices. Pleo provides the ability to automatically transfer funds to suppliers at specific time intervals and thereby reduces the number of repetitive invoices that a company’s finance professionals must prepare.

The startup generates revenue from two sources. It takes a commission on every purchase and also charges a monthly fee per employee for which a company issues a card. 

The startup says its software is used by more than 17,000 organizations worldwide. Pleo Chief Executive Officer Jeppe Rindom (pictured, left, with co-founder Niccolo Perra) told CNBC that those customers are generating close to $100 million in annual recurring revenue for the startup, though it’s not yet profitable. With the newly raised $150 million in funding, Pleo hopes to add yet more customers by spending more on marketing and expanding into additional markets.

Pleo is one of multiple startups in the payment card ecosystem that have achieved multibillion-dollar valuation over the last few years. Divvy Inc., a company that similarly to Pleo helps enterprises issue corporate payment cards to their employees, was recently acquired by fellow fintech provider Bill.com Inc. in a deal that valued it at $2.5 billion. Another market player, Marqeta Inc., went public in early June and reached a more than $14 billion market capitalization on its first day of trading.

The segment’s growth is likely driven at least partly by the fact that companies are increasingly working to automate repetitive business tasks as part of their digital transformation initiatives. 

Creating expense reports has historically been a manual process. As such, the task is a natural focus for automation initiatives. Corporate payment cards reduce manual work not only because they remove the need to input employee expenses into a firm’s accounting system by hand, but also because they allow workers to make purchases more easily.

Fintech startups beyond the payment card ecosystem are also working to help companies automate repetitive chores in the accounting department. Tipalti Inc., which provides a cloud service that automates the process of paying suppliers for goods and services, raised $150 million last October at a $2 billion valuation. Candis GmbH raised $14 million a few months earlier for a platform that improves finance teams’ productivity by using machine learning to speed up some of the tasks involved in organizing a company’s financial records.

Venture-backed fintech companies raised a total of $22.8 billion in funding during the first quarter of 2021, according to market intelligence platform CB Insights. The figure represents a 98% increase over the same time a year earlier. 

Photo: Pleo