Pemo: Why We Invested
By Perry Blacher, Partner at Augmentum Fintech and Johnnie Martin, Investor at Augmentum Fintech
Today, we announced that we are leading a USD7 million funding round with a USD4 million investment into UAE-based Pemo, an innovative expense management solution serving customers across the Middle East. We are investing alongside Abu Dhabi-based Shorooq Partners, and join existing investors including Cherry Ventures, Speedinvest and Fintech Collective.
Read more about our thesis for investing below.
The expense management landscape
Through the first fintech wave, expense management has become one of the best known and well-funded verticals with success stories in Europe and the US. Companies including Pleo, Payhawk, Moss and Ramp have raised significant capital and established themselves as true category leaders. Their solutions have allowed businesses to streamline expense reporting, automate workflows and improve overall financial transparency. These markets have become well-served with many advanced tools catering to companies of all stages and sizes. As a result, these companies are becoming ubiquitous, and a slick expense management solution is now table stakes for any employer looking to empower their teams to work as efficiently as possible.
We have followed the space closely over the years, and while significant growth has been seen in the West, competition amongst players vying for market share has become intense, with lofty valuations offered by investors, making investing in ventures in this vertical at an early stage in Europe less appealing for us. Upon researching other markets, particularly the Middle East, we found an entirely different landscape.
MENA: An underserved market with greenfield opportunity
We have seen fintech innovation permeate across the US, Europe and APAC, with many businesses capturing significant value in these markets. While our geographical centre of gravity for investment at Augmentum is Europe, we make sure we keep a close eye on developments in other high potential, high growth regions. Against the backdrop of growing global maturity, innovation in MENA is nascent, and with fintech revenues in the region predicted to grow 13x from 2022 to 2030, compared to 6x globally¹, we have identified a significant investment opportunity here.
While the European expense management market has become well served in recent years, the SME market across the Middle East, and specifically the UAE, has to date not had an adequate proposition suitable for the growing demand, with only 1.7% of the USD122 billion² total corporate spending being made on corporate cards. The UAE is one of the most dynamic and fast-growing business environments with the total number of SMEs forecast to increase to over 1 million by 2030 from 550,000 in 2022³.
We see this as a significant opportunity. There is a stated mission to drive digital transformation within the region. To aid this, the regulators in the region have implemented robust regulatory frameworks and polices that are supportive of the fintech ecosystems.
Enter Pemo, the all-in-one expense management solution for SMEs
It was exactly this greenfield opportunity that drew Ayham, Saed, Valarie and Alessandro to founding Pemo, stepping into the gap with a solution that meets specific local needs while leveraging best practices from international markets.
Pemo have taken a cutting-edge approach to the expense management category with a solution that is tailored for the SME market in MENA. Including smart features such as AI-driven automated accounting, real-time spend analytics and smart payment workflows, the team has built a product that is truly loved by their customers. The team’s product velocity has been highly impressive as they roll out features that are required by their customers, including cost efficient FX services, which is a necessity of doing business in the region. Through this array of features, not only does Pemo drive efficiency and the visibility a company has over their spend, but they also ensure ongoing compliance with relevant laws and regulations.
The traction that Pemo has displayed since launching in 2022 is impressive. The business has surpassed AED1.4 billion in transactions, serves over 4,000 businesses and is recognised as a clear leader in the UAE. The early partnerships and positive feedback from customers underscore not only the market need for the solution but also the stelar execution of the team so far. The team is executing an impressive product-led growth strategy: they have built a highly repeatable and predictable sales motion for a product that is truly loved by their customers. A proportion of this funding will be used to help Pemo drive growth in additional markets.
Backing a leading team
Pemo has a high calibre founding team comprising a number of serial entrepreneurs who bring a wealth of experience from both large corporates and scale-ups including Google, Rocket Internet, Zalora and Pleo. Their passion and relentless focus on delivering a quality solution to their customers has been clear since day one and this is reflected in customer feedback and product engagement.
Valerie Konde, Co-Founder at Pemo, said, “We are thrilled to have secured investment from Augmentum, one of Europe’s pre-eminent fintech investors. While there is no shortage of capital in the Middle East, it was a no-brainer to add Augmentum to Pemo’s cap table for this next exciting phase of growth. They clearly know the fintech sector inside and out, and their experience both as investors and operators will be invaluable — we look forward to benefitting from access to their vast network and deep sector expertise. We have been highly impressed with Perry and the Augmentum team in our conversations this far, finding them to be thoughtful and thorough yet fast-moving. We are pleased they recognise the significant potential of the Pemo vision and know they will be true value-add partners as we accelerate into our next phase of growth.”
The investment into Pemo represents a new chapter for Augmentum. We search relentlessly for exceptional fintech founders tackling huge opportunities in large, growing markets, and this investment, our first in the Middle East, offers exposure to a rapidly growing market ripe for disruption. As with all of our investments and enabled by our evergreen structure, we view this as a long-term partnership, and we are committed to helping Pemo scale its offering and become the dominant player in expense management both in the UAE and across the wider Middle East.
Stay tuned as we embark on this new chapter with Pemo.
1: BCG Global Fintech Report 2023
2: Mastercard UAE SME State of Business Survey 2022
3: https://u.ae/en/information-and-services/business/small-and-medium-enterprises
