expenses
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Pleo raises $150M at a $1.7B valuation for its new approach to managing expenses for SMBs
Whether you are part of the accounting department, or just any employee at an organization, managing expenses can be a time-consuming and error-filled, yet also quite mundane, part of your job. Today, a startup called Pleo — which has built a platform that can help some of that work more smoothly, by way of a vertically integrated system that includes payment cards, expense management software, and integrated reimbursement and pay-out services — is announcing a big round of growth funding to expand its business after seeing strong traction.
The Copenhagen-based startup has raised $150 million — money that it will be using to continue building out more features for its users, and for business development. The round, which sets a record for being the largest Series C for a Danish startup, values Pleo at $1.7 billion, the startup has confirmed.
There are around 17,000 small and medium businesses now using Pleo, with companies at the medium end of that numbering around 1,000 employees. Now with Pleo moving into slightly larger customers (up to 5,000 employees, CEO Jeppe Rindom, said), the startup has set an ambitious target of reaching 1 million users by 2025, a very lucrative goal, considering that expenses management is estimated to be a $80 billion market in Europe (with the global opportunity, of course, even bigger).
It will also be using the funds simply to expand its business. Pleo has around 330 employees today spread across London, Stockholm, Berlin and Madrid, as well as in Copenhagen, and it will be using some of the investment to grow that team and its reach.
Bain Capital Ventures and Thrive Capital co-led this round, a Series C. Previous backers, including Creandum, Kinnevik, Founders, Stripes and Seedcamp, also participated. Stripes led the startup’s Series B in 2019. It looks like this round was oversubscribed: the original intention had been to raise just $100 million.
Like other business processes, managing expenses and handling company spending has come a long way in the last many years.
Gone are the days where expenses inevitably involved collecting paper receipts and inputting them manually into a system in order to be reimbursed; now, expense management software links up with company-issued cards and taps into a range of automation tools to cut out some of the steps in the process, integrating with a company’s internal accounting policies to shuffle the process along a little less painfully. And there are a number of companies in this space, from older players like SAP’s Concur through to startups on the cusp of going public like Expensify as well as younger entrants bringing new technology into the process.
But, there is still lots more room for improvement. Rindom, Pleo’s CEO who co-founded the company with CTO Niccolo Perra, said the pair came up with the idea for Pleo on the back of years of working in fintech — both were early employees at the B2B supply chain startup Tradeshift — and seeing first-hand how short-changed, so to speak, small and medium businesses in particular were when it came to tools to handle their expenses.
Pleo’s approach has been to build, from the ground up, a system for those smaller businesses that integrate all the different stages of how an employee might spend money on behalf of the company.
Pleo starts with physical and virtual payment cards (which can be used in, for example, Apple Wallet) that are issued by Pleo (in partnership with MasterCard) to buy goods and services, which in turn are automatically itemized according to a company’s internal accounting systems, with the ability to work with e-receipts, but also let people use their phones to snap pictures of receipts when they are only on paper, if required. This is pretty much table stakes for expense software these days, but Pleo’s platform is going a couple of steps beyond that.
Users (or employers) can integrate a users’ own banking details to make it easier to get reimbursed when they have had to pay for something out of their own pocket; or conversely to pay for something that shouldn’t have been charged on the card. And if there are invoices to be paid at a later date from the time of purchase, these too can be actioned and set up within Pleo rather than having to liaise separately with an accounts payable department to get those settled. Higher priced tiers (beyond the basic service for up to five users) also lets a company set spending limits for individual users. Pricing is based on number of users, per month.
Pleo also has built fraud protection services into the platform to detect, for example, cases when a card number might have been compromised and is being used for non-work purposes.
What’s notable is that the startup has built all of the tech that it uses, including the payments feature, from the ground up, to have full control over the features and specifically to be able to add more of them more flexibly over time.
“In the beginning we ran with a partner in services like payments, but it didn’t allow us to move fast enough,” Rindom said in an interview. “So we decided to take all of that in-house.”
It seems like this opens the door to a lot of possibilities for how Pleo might evolve in the years ahead now that it’s focused on hyper-growth. However, Rindom added that whatever the next steps might be, they will remain focused on continuing to solve the expenses problem.
“When it comes to our infrastructure we use it only for ourselves,” he said. “We have no plans of selling [for example, payments] as a service, even if we do have a lot of other ideas for broadening our offerings.” Indeed, the ability to pay invoices was launched only in April of this year. “We come up with things all the time, but will launch only those relevant to customers.” For now, at least.
That focus and perhaps even more than that the execution and customer traction are what have brought investors around to backing a fintech out of Copenhagen.
“The future of work empowers employees with the tools they need to be effective, productive, and successful,” said Keri Gohman, a partner at Bain Capital Ventures, in a statement. “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.”
Bain has been a pretty active investor in European fintech, also backing GoCardless in its recent round. “BCV invests in founders who aren’t afraid to tackle big problems, and Jeppe and Nicco saw a big challenge that employers faced—tracking all corporate spending and reconciling expenses back to the general ledger—and solved it with elegant technology that both employers and employees love,” added Merritt Hummer, a partner at Bain Capital Ventures.
Thrive is also a notable backer here, and it will be interesting to see how and if Pleo links up with others in the VC’s portfolio, which include companies like Plaid, Gong and Trade Republic.
“Pleo has already transformed the way that over 17,000 companies think about managing their expenses, saving them time and lowering costs while increasing transparency,” noted Kareem Zaki, a general partner at Thrive Capital, in a statement. “We are excited to partner closely with the Pleo team to help drive their next phase of growth.”
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Blue dot raises $32M for AI that helps businesses manage their tax accounting
Artificial intelligence has become a fundamental cornerstone of how a lot of business software works, providing a useful boost in reading, understanding and using the often-fragmented trove of data that organizations generate these days. In the latest development, an Israeli startup called Blue dot, which uses AI to help companies handle their tax accounting, is announcing $32 million in funding to continue its growth, specifically addressing the demand from companies for more user-friendly tools to help read and correctly itemize expenses for tax purposes.
“The tax sector is very complicated, and we are playing in a very large space, but it’s a huge revolution,” Blue dot’s CEO and co-founder Isaac Saft said in an interview. “Business and enterprise accounting is just not going to look the same in the future as it does today.”
The funding is being led by Ibex Investors in partnership with Lutetia Technology Partners, with past investors La Maison Partners, Viola and Target Global also contributing. Blue dot rebranded only last week from its original name, VATBox (part of the funding will be used to help Blue dot move deeper into the U.S. market, where the concept of VAT is not quite so ubiquitous: there is no national sales tax and states determine the rates themselves).
PitchBook notes that under its previous name, the startup last raised money in 2017, a $20 million Series B led by Viola at a $120 million post-money valuation.
While Blue dot is not disclosing valuation today, it’s likely to be significantly higher than this based on some of its engagements. In addition to customers like Amazon, tobacco giant BAT and Dell, it also has a partnership with one of the bigger names in expense accounting, SAP Concur, which uses Blue dot to power its expense data entry tool to automatically read charges and figure out how to itemize them so that employees or accountants don’t need to go through the pain of that themselves.
As Saft describes it, part of what is propelling his company’s business is the bigger trend of consumerization and the role that it has played in enterprise services: the working world has picked up a lot of technology tools, led by the smartphone, to help them organize their personal lives, and a lot of what they are being “served” through technology is increasingly personalized with lower barriers of entry, whether its on e-commerce sites, entertainment or social media. In the working world, people can often be frustrated as a result with how much work something like expenses can involve — a process that gets ever more complicated the more strict tax regimes become.
Blue dot’s approach is to essentially view the tax accounting process as something that can be improved with AI to make it easier for people to use — whether those people are workers itemizing their expenses, or accountants auditing them and running those through even bigger accounting processes. With a machine learning system that both takes into account a company’s own internal compliance and company policies, and the wider tax and regulatory framework, Blue dot helps “read” an expense and figure out how to notate it, how much tax should be accounted and where, and so on.
This is especially important as the process of entering and managing expenses gets pushed out to the people spending the money, rather than dedicated accountants handling that work on their behalf. An awareness of how modern offices are functioning today and evolving is one reason why investors were interested here.
“We believe Blue dot can change the way organizations worldwide manage accounting and its tax implications for their expenses,” Gal Gitter, a partner at Ibex, said in a statement. “There’s been a major market shift away from centralization of enterprise functions, including procurement. As that accelerates, more companies will be looking for ways to replace costly and complex manual processes with digital, automated solutions that use data and AI to essentially enable transactions to report themselves, which Blue dot delivers.”
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Digits launches a free expense monitoring dashboard for small businesses, closes on $22M Series B
Digits, a fintech startup hailing from the same team that built and sold Crashlytics to Twitter, is officially launching today after two years of development. It’s also announcing a $22 million Series B round of funding led by GV, as it makes its public debut.
While the company had been fairly quiet about product details while in stealth mode, it’s today unveiling its first product: a visual, machine learning-powered expense monitoring dashboard aimed at startups and small businesses.
The dashboard, called Digits for Expenses, helps business owners track how their company is spending money, by showing things like spend by category, by identifying vendors and recurring expenses and by offering real-time alerts, among other features.
Instead of requiring business owners to make a switch from their existing financial solutions, Digits connects with the accounting software, banks, payroll providers, financial packages, sources of revenue and credit cards the business already uses — like Xero, QuickBooks, NetSuite, Citi, Bank of America or Chase, for example.
At launch, the list includes more than 9,000 banks, with support for Xero and NetSuite coming soon.
After setup, Digits will then automatically analyze the company’s spend and visualize it, in real time.
While visualizations of data may be reminiscent of personal finance startup Mint, Digits’ web-based solution is more technical in nature and offers an expanded analysis of the data on hand. Plus, as a business solution, it has to offer features like security, permissioning and collaborative workflows, which results in a more sophisticated product.
Digits also uses machine learning technology to predictively categorize transactions as they happen and the software can alert users to anomalies — like suspicious activity or unexpectedly large transactions — in real time. Business owners can use the dashboard to find out things like how quickly expenses are growing, what the cash flow looks like, where costs can be trimmed, what services are being paid for on a recurring basis and more, and can search for transactions.
The software also supports the ability to comment on transactions, loop in a colleague to ask for clarification about a charge and upload missing receipts. Everything uses HTTPS along with TLS and certificates so data is encrypted between Digit’s services and at rest.
The original idea for Digits came from a problem that co-founders Wayne Chang and Jeff Seibert faced themselves when building Crashlytics. As they explained previously, their focus as entrepreneurs was on solving technical challenges, not on the operational side of running a business.
Many entrepreneurs also find themselves in this same space. They’re trying to solve a problem or crack a tough engineering puzzle, but instead have to redirect their time and resources to spreadsheets, financial reports, transaction records and other paperwork required to actually run the business.
“Startups and small businesses today simply don’t have the resources to manage their finances internally. Most of them still settle for spreadsheets, and the lucky ones work on an hourly basis with external accountants,” explains Seibert. “As a result, their accounting itself is seen as a cost-center, and they pay for little beyond the basic monthly financial statements — Profit & Loss, Balance Sheet, etc. By the time those statements are delivered — weeks after the end of each month — they’re already out of date,” he said.
That means things businesses need — like updates, one-off reports and new budgets — can require additional costs and longer wait times, so they get skipped.
The COVID-19 pandemic has put even more pressure on small businesses, many of which are now struggling to even survive. As a result, Digits has decided to launch the product for free to those who sign up — not a free trial, but actually free. It plans to later charge for additional products and paid upgrades to support its own business.
Digits is able to make this offer because of its now-expanded venture funding.
Already, the company had raised $10.5 million in Series A funding in a round led by Benchmark. That round had included a sizable 72 angel investors as well, including founders and CEOs from companies like Box, GitHub, Tinder, Twitch, StitchFix, SoFi and several others — entrepreneurs with an understanding of the problems Digits is aiming to solve.
Today, Digits is announcing an additional $22 million led by Jessica Verrilli at GV, who also now joins Digits’ board alongside Benchmark’s Peter Fenton. (Benchmark also participated in the new round).
“Jeff and Wayne are masterful at creating intuitive, high-utility products from complicated data,” said Verrilli about the GV investment. “I saw this up close with Crashlytics and Twitter, and I’m thrilled to partner with them on Digits as they reimagine financial software for startups,” she added.
The startup, now a team of 18 and hiring, was already offering its software solution to a group of customers ahead of today’s public launch, who effectively operated as beta testers allowing Digits to refine its product. Digits isn’t able to share its customer names, for the most part. However, it noted that Coda was one of early adopters and provided valuable feedback.
It also has over 10,000 companies who joined its waitlist over the past two years who are now being let in.
At the time of its Series A, Digits saw more than $1.5 billion in transaction value flowing across its production systems. That number has since grown to $8 billion.
The software is free starting today for U.S.-based small businesses. The company plans to add support for international markets later this year.
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Microsoft’s new expense tracker Spend hits the App Store
The team behind mileage-tracking app MileIQ, a company Microsoft acquired a few years ago, is out with a new application. This time, the focus isn’t on tracking miles, but rather expenses. The new app, simply called “Spend,” arrived on the App Store on Thursday, offering automatic expense tracking for work reimbursement purposes or for taxes.
Spend doesn’t appear to be a part of some grand Microsoft plan to take on expense tracking industry giants, like Expensify or SAP-owned Concur, for example. At least, not at this time.
Instead, the app is a Microsoft Garage project, the App Store clarifies.
Microsoft Garage is the company’s internal incubator when employees can test out new ideas to see if they resonate with consumers and business users.
Through the program, a number of interesting projects have gotten their start over the years, like the Cortana-based dictation tool, Dictate; mobile design creation app Sprightly; short-form email app Send; the Word Flow keyboard for smartphones; a Bing-backed alternative to Google News; and dozens more.
The new Spend app, at first glance, looks well-designed and easy to use.
Like most expense trackers, it offers features like the ability to take photos of receipts, expense categorization features, and reporting.
However, what makes Spend interesting is the app’s automated tracking and matching, and its user interface for working with your receipts.
The app begins by automatically tracking all your expenses from a linked credit card or bank account. You can then swipe on the expenses to mark them as personal or business. These expenses are automatically categorized, and you can add extra tags for added organization.
You can also add notes to purchases, split expenses, and customize expense categories, in addition to tags.
And the app can generate expense reports on a weekly, monthly or custom bases, which can be exported at spreadsheets or PDFs. There’s a web dashboard for when you’re using the app at your computer, but Spend doesn’t appear on the MileIQ main website at this time. It does, however, have a support site.
How well this all works, in practice, requires further testing.
MileIQ had been the top-grossing finance app in Apple’s App Store for the last 20 months at the time of its acquisition back in 2015. Microsoft had said then the team would work on other mobile productivity solutions going forward.
Since joining Microsoft, the team that created MileIQ has added capabilities to MileIQ, such as MileIQ for Teams, new intelligence features and a partnership with Xero. MileIQ is also now included with Microsoft 365 Business and Office 365 Business Premium plans
However, Spend is the first standalone app built by the team in that time.
The company says the new Spend app is an early version, and they plan to revise it going forward as they make improvements.
Microsoft responded to a request for comment, but didn’t provide any details about its eventual plans for Spend, like whether it will have business model or be included with Office subscriptions.
10/19/18: Updated after publication with information about Microsoft’s comments.
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