Corona Impact Series: How a Shoreditch expense-tech bounced back during lockdown
In this series, City PM looks at the financial and economic impact of the ongoing pandemic on a range of small and medium-sized businesses across London. Today: How an expense-tech scale-up helped businesses keep track of their spending when spending dropped through the floor.
Before the pandemic, Jeppe Rindom, co-founder and CEO of Pleo – a Shoreditch-based startup helping businesses across London and the UK to automate their expenses – was hitting milestone after milestone.
Since its launch in 2018, the firm quickly grew from 2,800 to 6,000 customers, with the likes of Pizza Pilgrims, Patch Plants and TechSpace amongst their earliest users.
“London was an obvious choice for Pleo to move to, it’s a hub for amazing talent, like-minded businesses and increasing opportunity in this space,” Rindom shared with City PM this weekend.
The team was also expanding fast, doubling in size from 80 to 170 people.
Moreover, a $56m Series B funding round in May 2019, led by Stripes, really put in perspective the goals of the company, which was founded four years earlier.
“Having experienced the frustration of drowning in business receipts myself. Part of my inspiration also stemmed from my childhood, when my father used to pay me as a child to match up shoeboxes full of receipts with bank-statements for his business,” the Denmark-born entrepreneur said.
“Something I never wanted to repeat in my professional career,” Rindom laughed.
“At the start of 2020, it really felt like we were on track to solve this issue, helping more and more businesses to take control of their spending and put a stop to the piles of receipts.”
Then the pandemic hit.
Lockdown saw Pleo experience a dramatic turn of pace as corporate spending ground to a dramatic halt for its small business customers.
“Like many companies, the impact was almost instantaneous. We had to pivot fast,” Rindom explained.
Redundancies
At the beginning of lockdown, in March of last year, Pleo’s initial focus was internal, addressing how its team could be fully operational while working remotely in various countries.
Like many companies, the initial impact of the virus on the business meant that Pleo had to reduce its team, saying goodbye to 12 of its employees.
“Letting people go is far from easy, but it was a necessary decision at the time to keep the business running,” Rindom said.
As a payments business, Pleo noticed the immediate impact of the pandemic on things like weekly spending, as card payments dropped by as much as 25 per cent.
Moreover, online and in-store spending shifted significantly. Pre-lockdown both were roughly 50/50 among its customers, however, since March of last year in-store spending sharply dropped to just 22 per cent of transactions as lockdown took hold.
“After seeing such drastic shifts in spending, our attention was immediately focused on supporting our customers,” Rindom said.
“At a time where businesses were being forced to scrimp and save, and were dealing with a remote workforce at the same time, we knew having a complete view of ingoings and outgoings would be vital,” he continued.
Virtual card
Bearing in mind the surge of businesses making online purchases – especially of software, marketing and advertising products – Pleo’s virtual cards became a key focus, moving up the roadmap in order to respond to the demand for greater digital payment capabilities.
The company focused on integrating features like Google and Apple Pay, moving them up their product roadmap due to the increased demand for digital and virtual payments.
Nevertheless, there are still many hurdles to overcome.
In fact, Rindom shared the outcome of a recent survey the company conducted with YouGov, which found that 1,000 UK businesses revealed that one in five small businesses were forced to reduce their spending by 69 per cent in the last year.
And with ongoing restrictions in the UK, he is conscious of exactly how severely customers are feeling the economic pinch.
Nevertheless, Rindom is still optimistic, citing a recent London and Partners report that found that, despite the pandemic, London still remains the biggest magnet for investment in Europe, attracting $10.5bn in fresh funding last year.
For Pleo, 2020 meant considerable challenges, as its livelihood is hugely dependent on the success of its customers.
After shifting its efforts to support those that were hit the hardest by the pandemic, the firm saw its customer base increase to over 13,000 in 2020, and grew its software business by 150 per cent.
“We have seen a growing need for businesses to set up their employees to work from home. As employees have been required to buy things from home to do their job, we have been a part of that,” Rindom said.
“We’ve been luckier than most. What started out as a huge headwind, became from about August a tailwind.”