TransferWise said it raised seed funding of $1.3 million in a round led by IA Ventures, Index Ventures, PayPal co-founder Max Levchin and a group of strategic angel investors. The company operates a crowd-sourced money transfer service.
Game-changing money transfer service TransferWise lands 1.3 million dollars from leading smart finance investors
London, United Kingdom April 18, 2012 – TransferWise today announced seed-funding of 1.3m USD for its revolutionary crowd-sourcing money transfer service.
Using a peer-to-peer model to get the best rate for consumers, the company has already saved users more than half a million pounds since its launch in January 2011.
Now it can expand thanks to investment led by IA Ventures, Index Ventures, Max Levchin (co-founder of PayPal) and a group of strategic angel investors. These include the people behind household names Wonga, Betfair and Paypal.
TransferWise utilises peer-to-peer trading and the power of the crowd to help their customers move money from one place to another in a secure, fast and convenient way at a low cost.
This cuts through the red tape in the traditional process of transferring money from one currency to another and guarantees a better exchange rate for both consumers and business groups.
Among those taking advantage of the service are workers employed overseas, international students, pensioners now living abroad and a growing number of small-to medium-sized businesses.
All TransferWise exchanges operate at the real mid-market exchange rates that traditional, big banks get on the interbank market.
But established banks often hide the exchange rate from their customers and add hidden fees – creating a lack of transparency over what they are paying for, and consumers ultimately paying over the odds because of the inability to compare like-for-like rates and fees.
By using the mid-market rate, and charging a low flat fee on small transfers (just 1GBP on transfers up to 300GBP) TransferWise is setting a new industry standard in favour of the consumer.
It also means greater transparency, fairness, ease-of-use and better value.
“We are using the power of technology and the crowd to disrupt the industry and cut out the middlemen, and many of the middling fees, from a service that is dominated by banks,” says Taavet Hinrikus, co-founder of TransferWise.
“It’s smart finance. Consumers and businesses deserve to be able to use the full power and reach of the funds they are trying to transfer and we want to restore integrity and transparency to the process and this growing industry.”
“Simply put, it’s all about making it easier and less expensive for the consumer.”
Traditionally, consumers pay a fixed-fee for foreign payments and lose a significant amount of money on the currency exchange. That amounts to 5 percent of the money being transferred.
TransferWise provides the same service in an easy to use online application for a fraction of that price.
“Taavet has proven that he can launch a global company, having previously built Skype together with Niklas Zennstrom from a simple idea on paper to hundreds of millions of users” said Robin Klein a partner at Index Ventures.
Kima Ventures, Seedcamp and The Accelerator Group also participated in the funding.
“TransferWise is moving the money transfer market to the 21st century at a time when many banks and traditional financial services firms are forgetting innovation and customer experience.” says Roger Ehrenberg, Managing Partner at IA Ventures who will join TransferWise’s board of directors.
Transferwise join an increasing number of startups choosing east London as a base, a development welcomed by UK Government agency Tech City.
“This funding round is exciting news for TransferWise and will provide the team with the capital and connections needed to continue expanding and developing their business. Importantly, it is also great to see leading international and UK investors recognising the calibre of talent and innovation flourishing the UK,” said Eric van der Kleij, CEO of TCIO. “Some of Britain’s most disruptive digital businesses are based in Tech City, and with increasing interest from such active and experienced international investors, companies like TransferWise will be in a great position to do well for themselves and their shareholders, while helping to grow our digital economy by creating new services that will change people’s lives for the better”"
TransferWise plans to use the funds to attract new talent, develop their technology platform further and expand into more currencies and markets.
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TransferWise launched in London in January 2011. The company was started by two Estonian entrepreneurs, Taavet Hinrikus and Kristo Kaarmann. Taavet was part of the small team that started Skype in 2003 and recently worked with a number of startups as an angel investor and advisor. Kristo is a financial services leader who spearheaded strategic efforts with Deloitte and PricewaterhouseCoopers. TransferWise is registered as Exchange Solutions Ltd and is licensed by the UK Financial Services Authority as an Authorised Payment Institution.
For more information about TransferWise, please visit www.transferwise.com
About Index Ventures:
Index loves Fintech. In the last five years, Index has made seed, venture and growth investments in some of the most cutting-edge smart finance brands including Funding Circle, Adyen, Boku, Erply, iZettle, Oanda, Trialplay, TransferWise and Zuora.
From offices in Geneva, London, and San Francisco, Index loves to discover and support the most entrepreneurial teams, wherever they are, to build market defining global businesses. For more information on these and other investments, please visit www.indexventures.com.