PARIS—French fintech Pennylane has raised €175 million, or about $204 million, in a Series E funding round that catapults its valuation to $4.25 billion, positioning the six-year-old startup as a frontrunner in the continent’s push for intelligent financial software. Led by growth investor TCV, the round drew new participation from Blackstone Growth alongside stalwarts Sequoia Capital, DST Global, Alphabet’s CapitalG, and Meritech Capital, bringing total funding to nearly €360 million, according to Sifted.

Founded in 2020 by Arthur Waller alongside Alexandre Roquoplo, Felix Blossier, and Edouard Mascré, Pennylane delivers an all-in-one platform merging accounting production, financial management, and payments into a collaborative workspace tailored for small and medium-sized enterprises and their accountants. The software centralizes invoicing, expense tracking, cash flow oversight, bookkeeping, and real-time treasury views, automating repetitive tasks while providing live data access. It now serves 6,000 accounting firms and 800,000 companies, predominantly in France, with 1,000 employees on board, as detailed by Tech Funding News.

CEO Arthur Waller emphasized the strategic timing in a statement shared via Tech.eu: “We had no immediate need for funding, but the opportunity to partner with investors like TCV and Blackstone with low dilution was a strategic advantage. This gives us the resources to stay fully independent while accelerating our lead in AI and expanding across Europe.”

Funding Fuels AI Ambitions Amid Profitability Push

Pennylane, nearing profitability after targeting €100 million in annual recurring revenue for 2025 per prior disclosures to Sifted, plans to channel the capital into aggressive R&D. Priorities include generative AI tools like an analysis copilot for accountants to interpret data, automate bookkeeping, and generate client insights—elevating advisory roles over manual drudgery. “Our growth has accelerated [since the last fundraise],” Waller noted on LinkedIn, as cited by Sifted. “But the market around us is accelerating too, with more consolidation and a race to build a financial super app. This is why we decided to accelerate the pace of our research and development investments even more.”

The platform’s modern tech stack already embeds AI for features such as smart automation and real-time visibility, distinguishing it from legacy systems. Expense management extends to issuing corporate cards for seamless employee spending and invoice-based borrowing, while custom dashboards integrate third-party tools for project-tied tracking, per SiliconANGLE. This accountant-first model fosters deep partnerships, with 95% of new enterprise clients arriving via accounting firms, as Waller highlighted in earlier comments to Sifted.

Waller has long championed AI integration: “Because we have a modern tech stack, we’re able to embed all kinds of AI, but also GenAI, into the product,” he told CNBC during a prior €75 million raise that doubled valuation to €2 billion. “We’re really trying to build a ‘co-pilot’ for the accountant.”

Regulatory Tailwinds Drive Continental Expansion

Europe’s regulatory shifts, including France’s mandatory electronic invoicing from September 2026 and similar mandates elsewhere, create tailwinds. Registered as an authorized platform since 2024, Pennylane automates compliance, helping firms transition without friction—a loyalty booster amid digitization lags. “Every business in France within a year from now will have to choose a product operator to issue and receive invoices,” Waller noted to CNBC, dubbing it a “huge market.” Sequoia partner Luciana Lixandru echoed: the reforms offer a “massive market opportunity” as accounting digitizes.

Expansion kicked off with a November 2025 Germany launch, planning 100 hires there, alongside eyes on Poland, Spain, and Belgium, as reported by SiliconANGLE and Tech Funding News. Localization for German rules and enriched payments/cash tools top the agenda, per Tech.eu.

This follows prior acquisitions like Chaintrust, signaling M&A intent. “What was at stake [with this Series C] was to have cash to do M&A,” Waller said to Sifted. “We have actors in front of us who have the money to acquire and we want to fight on equal terms.”

Challenging U.S. Giants on Home Turf

Pennylane positions against Intuit’s QuickBooks, Xero, and Sage by prioritizing continental accountants’ needs—localized compliance over one-sided tools. “We 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,” Waller explained to CNBC. Its shared-access model aligns accountants and clients, unlike fragmented U.S. rivals.

Europe’s tax accounting software market, projected to grow from $4.65 billion in 2025 to $10.3 billion by 2035 at 8.2% CAGR, amplifies the stakes, as noted in analyses tied to Tech Funding News. Pennylane embodies a shift toward local solutions, reducing reliance on American giants amid data sovereignty pushes.

Backers like TCV, known for scaling software leaders, and Blackstone signal consolidation bets. The round’s low dilution preserves independence, fueling a predator stance in a maturing sector.

Path to Scale in a Consolidating Arena

From unicorn in 2024 via €40 million at €1 billion to this near-doubling in seven months post-€75 million Series D, Pennylane’s trajectory reflects execution amid frosty markets. Total raises exceed $437 million per Tracxn, with rapid customer growth—40x SMEs in two years early on.

Challenges loom: SME digital readiness gaps and execution on AI/regulatory deadlines, like France’s 2026 mandate. Yet, with profitability in sight and AI copilots poised to amplify expertise amid talent shortages, Pennylane eyes financial OS supremacy.

Waller’s vision persists: “Our mission remains unchanged: being the reference tool for accountants and their clients,” as affirmed to Tech.eu. In Europe’s fintech arena, this raise marks not just capital inflow, but a calculated strike for enduring control.