French accounting software company Pennylane has doubled its valuation to 2 billion euros ($2.16 billion) as part of a new 75 million euro financing round.
According to media reports, the mentioned firm received funds from venture funds, co-led by Sequoia Capital, Alphabet’s CapitalG, and Meritech. DST Global also participated in the funding round.
Pennylane was founded in 2020. This company sells a so-called all-in-one accounting platform. The mentioned platform is used by accountants and other financial professionals. This functional space is primarily focused on small and medium-sized companies and offers tools such as spanning expensing, invoicing, cash flow management, and financial forecasting.
Pennylane’s chief executive officer and co-founder Arthur Waller, during a conversation with media representatives, said that the company came in tailoring a product that looks a bit like Intuit’s QuickBooks or Xero but adapting it to the needs of continental accountants, starting with France.
Pennylane currently serves approximately 4,500 accounting firms and more than 350,000 small and medium-sized enterprises. As part of the investment round last year, the company was valued at 1 billion euros.
Currently, Pennylane operates only in France. After the new fundraising, the company intends to expand the scale of its business across Europe. In the summer, the firm plans to launch operations in Germany.
Arthur Waller stated that the company has a lot of work to do. He noted that it took the company about five years to get the product mature in France. At the same time, he hopes to reach product maturity in Germany in a shorter period of two years.
Pennylane also plans to end 2025 with annual recurring revenue of approximately 100 million euros. This indicator corresponds to a measure of the annual revenue generated from subscriptions that renew each year.
Arthur Waller stated that the company intends to get breakeven by the end of 2025. According to him, Pennylane runs on lower customer acquisition costs compared to other fintech brands. He also noted that 75% of the company’s costs are accounted for by research and development.
Moreover, Pennylane intends to boost hiring after a new round of financing. By the end of the current year, the company plans to increase the number of employees to 800 people. The firm currently employs 550 people.
Pennylane uses artificial intelligence as part of its activities. It is worth noting that AI leverage is currently a widespread practice in the fintech sector. Arthur Waller stated. that his company uses artificial intelligence to help clients automate bookkeeping and free up time for other things such as advisory services. He noted that since Pennylane has a modern technological stack, it can embed all kinds of AI, including generative digital intelligence. According to him, the company is really trying to build a co-pilot for an accountant.
Arthur Waller stated that the new electronic invoicing regulations coming into force across Europe are pushing more and more firms to consider new digital products to meet their accounting needs. He noted that every business in France within a year from now will have to choose a product operator to issue and receive invoices. According to him, e-invoicing is a huge market.
Luciana Lixandru, a partner at Sequoia who sits on the board of Pennylane, said in a media comment that the reforms represent a massive market opportunity. In this context, it was noted that the accounting industry is still catching up in terms of digitalization. Luciana Lixandru also stated that the reality is that the market is very fragmented. It was overlined that in every country there are one or two decades-old incumbents and few options that serve both small and medium-sized businesses and accountants.
It is worth noting that the digitalization of accounting is changing the way financial processes are managed, making them more accurate, transparent, and efficient. The corresponding process has various aspects and, in a certain sense, dimensions.
Automation of routine tasks is one of the most important results of the digitalization of accounting activities. Virtual tools and software can provide appropriate results in the context of repetitive tasks such as entry, payroll, and invoice processing. Also, in this case, reducing human error and saving time are provided.
Cloud accounting platforms provide consumers with real-time access to financial data from anywhere. In this case, collaboration and decision-making are improved. The use of artificial intelligence and machine learning in the framework of digitalization of accounting activities, among other things, provides the analysis of large amounts of data, the identification of various anomalies, and the generation of predictive conclusions. In this case, financial planning improves. Moreover, one of the components of the process of digitalization of accounting activities may be the use of blockchain technology. This solution provides a high level of security and protection against illegal interference in data arrays by cyber criminals.
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