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Kinnevik Stake
Offers smart payment cards to employees while making sure the company remains in full control of spending

The market

Expense management is a category with great potential. It is a horizontal problem, meaning there’s a large surface area of businesses from several sectors to go after, and consequently a large serviceable available market (SAM). In addition, it gives you access to the large volume of financial flows generated through expense processing. With Pleo processing billions in expenses every year, it thereby provides an additional monetisation lever.

Historically, the expense management category has been highly manual. Employees have been using corporate cards and keeping paper receipts, requiring manual approvals where admin teams match paper receipts against the card. It was estimated that this process took 40 hours a month alone. Clearly, it is a broken system in need of disruption and new solutions.This is where Pleo comes in.

The company

Pleo, a Danish fintech company, has carved a niche for itself by simplifying the often-cumbersome process of corporate expense management. Through its integrated solution of physical and virtual cards paired with intuitive software, Pleo automates expense tracking and categorisation, offering valuable real-time insights to businesses and their employees alike. In addition, the company has demonstrated its ability to grow it's addressable market and drive higher average revenue per account (ARPA) by expanding into the broader spend management value chain, successfully going after spend categories like recurring payments.

Founded in 2015, Pleo has witnessed remarkable growth, expanding from its Danish roots to establish a strong presence across Europe. This scaling journey, fuelled by strategic funding and a commitment to innovation, has led them to evolve into a leading player in the corporate expense management space. Pleo’s focus on user experience, automation, and continuous product development has the company positioned for continued success, making Pleo worth watching in the ever-evolving fintech landscape.

The Investment Case

Kinnevik was first introduced to Pleo in 2018. As an investor, Pleo had everything you could ask for—a strong and experienced founding team, an asset-light and scalable business model, and solid business fundamentals built on an idea to disrupt a category that had historically been underserved. Specifically, the most intriguing areas about Pleo were and still are:

  • Scalability: Pleo’s product-led growth motion allowed for a low-touch go-to-market (GTM); customers were able to onboard themselves to the product, scaling usage, and consequently average revenue per account (ARPA), as it grew.
  • Business model and unit economics: Predictable, recurring revenue with additional upside from transaction revenues; strong net revenue retention (NRR) as companies increased usage over time.
  • Stellar management team: Jeppe Rindom, Pleo’s CEO, was regarded as one of the best founders in the Creandum portfolio and has truly lived up to this reputation ever since. The Pleo management team are deliberate and focused in everything they do and make great Type 1 decisions.
  • Large addressable market: Given the horizontal nature of the problem, the total addressable market (TAM) is well into the tens of billions of euros, with an even wider opportunity to expand through the spend management value chain.

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