in

TransferWise – Fintech startup raises $280 million investment

Money without Borders

transferwise raises $280M

TransferWise, an international money transfer startup just raised $280 million, bringing company’s total valuation at $1.6 billion.

The company announced on Tuesday that it raised such enormous amount in a series E round led by the venture capital firm IVP and the asset manager Old Mutual Global Investors.

The London-based company which was valued at $1.5 billion in August, is now valued at $1.6 billion, raising a total amount of $397 million. Due to its high valuation, the company became a member of the ‘unicorn club’ that includes companies with a valuation of a billion dollars or more. The list of investors includes some high profile names like Andreesen Horowitz, Richard Branson and Bailie Gifford. Companies like Silicon Valley’s Sapphire Ventures, Japanese company Mitsui & Co, Ltd and U.S-Japan venture firm World Innovation Lab also participated in the investment.

TranferWise had been profitable since the start of 2017 and now plans to expand in Latin America and Asia, using the investment money.

The company, like other payment startups, helps people move their money across borders. It started off as a startup that assisted individuals to move money from one country to another, charging less than 1% for the transaction. But then it added business customers by introducing a service called “Borderless accounts”, that lets companies maintain balances in multiple across border companies.

“Around the world small and medium businesses are similarly screwed. They’re being simultaneously underserved and overcharged by the banks,” said the co-founder of TransferWise, Taavet Hinrikus.

He further said that the company currently has 10% of the international transfer market in U.K and expects that to rise to 20% and according to him it is “earlier in the penetration curve” in the U.S

Early reports claim that early employees were expected to permit sell a portion of their stake in TransferWise, including founders Taavet Hinrikus and Kristo Kaarmann.

Recently Seedcamp cashed in the rest of its stake in TransferWise as part of selling its first two funds to London VC Draper Esprit. Seedcamp had already sold part of its stake back in January.

This all means that the so-called ‘unicorn’ is a long way off from going public. Co-founder Hinrikus best estimates that an IPO for the company is three or four years away.

Hinrikus who is currently in Peru for vacations confirmed that this new investment includes some employees partly cashing in, but the main aim is to provide TransferWise a healthier balance sheet for its functioning and for acquiring new opportunities.

The company aims to expand globally with a particular focus on the APAC region and grow its ‘borderless account’ services for businesses. TransferWise also announced a regional hub office in Singapore this year.

The Borderless accounts are online banking accounts that were launched in May, focused on businesses, sole traders and freelancers who plan to conduct business across borders in multiple currencies. TransferWise charges comparatively low exchange rate than others, making it a more favorable choice for businesses. These accounts were initially launched in U.K. and TransferWise plans to roll them out globally.

A consumer version is to launch in early 2018 in the U.K. and Europe. That would be including TransferWise debit cards for customers. TransferWise is being compared to other fintech startups like Revolut or the other competitors including Azimo and PayPal-owned Xoom.

TransferWise is already joining hands with banks including N26 and soon Starling.

As for technology, TransferWise has no intention to jump on the blockchain bandwagon, like most banks and big companies (for example IBM) are testing, for international payments. Hinrikus said that TransferWise will continue its preferred approach i.e. to work with local payment networks in different countries. According to him “it takes an eternity for banks to adopt a new technology.”

TransferWise’s bumper funding round just came days after Remitly – a Seattle-based money transfer service – raised $115 million to expand its remittance business.

Currently, TransferWise serves 2 million customers and offers 750 currencies. The company plans to expand to Asia in the next 12 months, including India and Nepal. Hinrikus recently visited Brazil for the same purpose. With a hub office in Singapore, the company has satellite offices in Tokyo and Sydney.

Today customers transfer $1bn every month, saving $1.5m as compared to their banks.

Also read: Moneyfarm acquires tech behind Fintech chatbot

What do you think?

0 points
Upvote Downvote

Total votes: 0

Upvotes: 0

Upvotes percentage: 0.000000%

Downvotes: 0

Downvotes percentage: 0.000000%

Comments

Loading…

Roger Federer

Director of the Paris Masters hits out at Federer

Apple taps $900B in Q4 2017

Apple taps $900B beating Wall Street’s expectations