We Got Funded: Dubai-Based Startup Pluto Raises US$6 Million In Seed Round To Enhance Corporate Spend Management Across The MENA Pluto provides expense management solutions for businesses by offering unlimited smart corporate cards with spend controls which can be used as an alternative to personal cards.
By Aalia Mehreen Ahmed •
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Dubai-based corporate spend management startup Pluto has raised a seed round funding of US$6 million (AED22 million) led by Global Founders Capital (GFC), with participation from Adapt VC, Soma Capital, Graph Ventures, and OldSlip Group.
The round also saw participation from entrepreneurs-turned-angel investors, such as the founders of Plaid, Airbase, and Ramp, as well as Tamara co-founders Abdulmajeed Alsukhan and Turki bin Zarah, and Tabby co-founder Hosam Arab.
Founded by Nayeem Zen, Mo Aziz, and Mohammed Ridwan, Pluto provides expense management solutions for businesses by offering unlimited smart corporate cards with spend controls which can be used as an alternative to personal cards. Available for employees as both physical and virtual options, these smart cards can be connected to existing business bank accounts. In fact, Pluto's virtual cards can be created almost instantly and can also be loaded onto digital wallets such as Apple Pay.
Notably, the Pluto platform also directly syncs the cards' transactional data to major accounting platforms. Elaborating on this particular point, Aziz, who is also the startup's CEO, says, "Most businesses use multiple tools today to incur business payments, and to get paid. These include spreadsheets, invoicing tools, accounting tools, expense tracking software." He then explains that addressing this issue forms the crux of Pluto's services. "Our vision is to become the only platform that businesses will need to make payments and to get paid," adds Aziz.
But before delving any further into how Pluto's solutions work it is perhaps necessary to gauge an understanding of the issues it's aiming to solve. "Currently most businesses in the region only have access to a single debit or credit card with no spend controls, which is extremely risky to share across the entire company," explains Aziz. "As a result, businesses have to distribute cash to employees for business expenses as well as burden employees with an overwhelming amount of out-of-pocket spend." The financial system Aziz alludes to here is one that has multi-fold disadvantages. For one, distribution of cash creates opportunity for malpractices within a given company, due to lack of immediate accountability. On the other hand, employees may lose spending power when they incur personal costs at the company's expense, since any reimbursement is typically done along with their monthly remuneration at the end of the month. Here, Aziz raises another related pain point for a company's spend control management. "Businesses also get no visibility on the expenses that are incurred, until the receipts are actually submitted by their employees, which could happen days or even weeks after the expense is incurred," he says.
It is to solve these inefficiencies that the co-founding trio at Pluto has come up with a solution that aims to help businesses in the MENA region digitize cash spend. "With Pluto, businesses can be proactive instead of being reactive, and save money even before spending, by connecting their existing bank accounts and issuing unlimited virtual and physical cards with spend controls that eliminate the need to distribute cash or rely on personal cards," explains Aziz. "Businesses also get real-time visibility on expenses that are incurred using Pluto cards, reducing fraudulent transactions dramatically. It also reduces the burden on employees, since they no longer have to incur business expenses and rely on monthly reimbursements."
Through this operational set-up, there are two key sources of revenue for Pluto- a subscription fee charged to businesses, and an interchange fee charged to vendors. "While we have a freemium model, allowing any business to use the base version of Pluto's platform for free, we charge a subscription fee for our premium tier that unlocks unlimited corporate cards as well as detailed insights on business spend data," explains Aziz. The interchange fee, on the other hand, is borne by any vendor who accepts the Pluto smart card. "The vendor is charged a certain amount for accepting the card, which is distributed amongst various participants, with most of the fee going to the issuer of the card, usually a bank," says Aziz. "Pluto cards will be powered by our partner bank, with whom we share a portion of this fee, known as interchange. Essentially, our customers do not pay any fees in this case."
This second revenue source is one that comes at a time when digitization of payments, across sectors, has very quickly become mainstream for businesses. Within the MENA region itself, Aziz says there is now a 90% card-acceptance rate in the UAE and Saudi Arabia with the latter having seen 94% of all in-store transactions being contactless. And it is a trend that provides opportunities for Pluto's further expansion, believes Aziz. "With the emergence of more B2B e-commerce marketplaces taking offline payments online, the bottle-neck today is that businesses aren't geared with the right tools, and purchases still go through long procurement cycles," he adds. "With Pluto however, online purchases will become a breeze. We're cutting down the time it takes from approving an online expense to paying vendors dramatically. We're also seeing a strong push towards online and digital payments at various government departments which further expands Pluto's use cases beyond just facilitating an employee's daily expenses."
With its latest infusion of capital, Aziz and his team are now looking to launch Pluto in the UAE very soon. And as the team looks to the journey ahead, they remain grateful for the help they've received in the UAE so far. "In 2022, we feel extremely fortunate to have the support of the Dubai International Financial Center and fintech hive who subsidize licensing costs, office space, and give you a platform to connect with customers and partners enabling you to hit the ground faster than ever." With plans to launch the product in Saudi Arabia in the latter part of the year as well, it will be interesting to keep an eye on how businesses in the region respond to Pluto's offerings.
