Valar Ventures, Index Ventures, Sir Richard Branson and other technology investors have invested $25 million in TransferWise. The London-based business is an international money transfer platform.
Peter Thiel’s Valar Ventures, Index Ventures, Sir Richard Branson and other high profile technology investors have invested $25m in international money transfer platform, TransferWise – a startup known for its “cheeky” anti-bank advertising.
The fast-growing, London-based company, has pledged to use its new funds to raise awareness of the hidden fees applied to overseas money transfers.
Typically banks and brokers disguise the full cost of their fees by hiding it within the exchange rate they offer. World Bank research shows that this significantly misleads consumers – almost two-thirds of those polled by them were unaware that there was any other component to the cost beyond the transaction fee. TransferWise believes that all costs should be presented upfront and only the mid-market exchange rate should be used to process transactions.
Today, TransferWise publishes independent price comparison research and a Pinterest “Board of Shame” featuring its competitors’ advertising on its website. These illustrate the excessive and opaque fees applied by banks and currency brokers for sending money abroad.
Sir Richard Branson, founder of the Virgin Group, said:
“I’m delighted to be investing in such an innovative company as TransferWise. Financial services such as foreign exchange have been ripe for disruption for decades and it’s great to see TransferWise bring transparency to the market. It’s encouraging to see entrepreneurs using technology to reinvent the old-fashioned FX industry and make a real difference in the market. I see tremendous opportunity for startups like Transferwise to offer breakthrough financial services and products.”
Taavet Hinrikus, co-founder of TransferWise, said:
“We are truly honoured to have Sir Richard Branson join Peter Thiel’s Valar Ventures, IA Ventures and Index Ventures to back our mission to stomp out hidden bank fees and make the world of money transfers a fairer place. This new investment and faith in our business is concrete affirmation that our campaign for transparency is really taking grip.
We’re going to use this money to lead the charge against hidden bank fees and expose the problem to a wider audience. It’s outrageous that they can get away with advertising that claims their transfers are ‘fee-free’ despite often taking up to 5% of the money sent through the exchange rate.“
This investment marks TransferWise’s ‘Round B’ funding, with Sir Richard Branson joining as a new investor. Existing investors also participated, including Peter Thiel’s Valar Ventures, IA Ventures, Index Ventures, TAG (Robin Klein and Saul Klein), and the owner of Le Monde Xavier Niel (via Kima Ventures). This brings the total TransferWise has raised to $33 million in the three years since its launch.
If you would like to have an interview with Taavet Hinrikus or Kristo Kaarmann, co-founders of TransferWise, please call Donata Huggins (07595051258) or Antonia Rofagha (07727819746) or email firstname.lastname@example.org.
You can see further examples of TransferWise’s “cheeky” advertising here.
Notes to editors:
International money transfers are more expensive than meets the eye – even when banks and brokers claim there are ‘no fees’. Many banks take as much as 5 percent of the money being sent. TransferWise is the clever new alternative that allows people to transfer money abroad at a lower cost than ever before. It uses technology developed by the people who built Skype and PayPal to remove all the fees the foreign exchange industry has kept hidden for decades. Customers have already moved more than £1bn using the platform – an approach that has put over £45m back in their pockets.
The business has transferred over £1bn worth of customers’ money, saving its users over £45m in banking fees.
TransferWise started in early 2011 with the two founders, making transfers between just British Pound and Euro. It has since added a further 100 members of staff and 234 currency routes. The firm continues to grow between 20-30 percent a month.
TransferWise has attracted $33m from some of the world’s most sought after investors. Most recently this includes an investment round led by Richard Branson, founder and CEO of Virgin Group. In May 2012, Facebook’s first outside investor and co-founder of PayPal, Peter Thiel led a $6m investment in the company. This marked his first Valar Ventures investment in Europe.
Other investors include SV Angel, fellow PayPal founder, Max Levchin, IA Ventures, Index Ventures, TAG (Robin Klein and Saul Klein), Seedcamp, Betfair’s former CEO David Yu, and the owner of Le Monde Xavier Niel (via Kima Ventures).
What are the founders’ backgrounds?
Taavet Hinrikus is co-founder of TransferWise. Prior to starting TransferWise, Taavet was Skype’s director of strategy until 2008, starting as the firm’s first-ever employee. He also helps the startup community as an advisor and angel investor. His investments include Tweetdeck, Mendeley, OMGPOP, Betaworks, Farmeron and Teleportd among others.
At TransferWise, Taavet looks after marketing and product development.
Kristo Kaarmann is the co-founder of TransferWise. Prior to starting TransferWise, Kristo was a management consultant with Deloitte Consulting and PricewaterhouseCoopers. He worked with European banks and insurers to modernise their processes and systems. Stunned by their inefficiency, he teamed up with Taavet Hinrikus, then Skype’s director of strategy, to develop an entirely new system for moving money across borders.
At TransferWise, Kristo is in charge of operations, development, and compliance.
How did TransferWise get started?
Estonian friends Taavet and Kristo came up with the idea for building the platform when they first became expats in London and were confronted by the high fees banks charge to transfer money abroad.
Taavet had worked for Skype in Estonia, so was paid in euros, but lived in London. Kristo worked in London, but had a mortgage in euros back in Estonia.
They realised they each needed the currency the other had, so they devised a simple plan: every month Kristo put pounds in Taavet’s British bank account and Taavet put euros in Kristo’s euro account. They used the official mid-market rate exchange rate (that’s the one in the papers, not the one invented by the bank). They both received the right amount of money, and neither paid any bank fees.
Within a few months they’d saved thousands of pounds and realised there were probably millions of others that needed a system just like theirs. So they set to work – the rest is TransferWise.
TransferWise supports currency transfers between Euro, British Pound, Swiss Franc, Polish Zloty, Turkish Lira, Romania Leu, Bulgarian Lev, Georgian Lari, Hungarian Forint, Danish, Swedish, Czech and Norwegian Krone. It also supports transfers from these currencies to Indian Rupee, US, Australian, Singapore, Hong Kong, and New Zealand Dollar. Transfers from these currencies to all other supported currencies and many other routes are coming soon.
TransferWise has reduced the cost of sending money abroad so significantly it doesn’t have a “typical customer”. Anyone who lives, works, studies or does business abroad will find significant savings.
That said, there are several broad groups we are particularly popular with at the moment.
(1) People just like Taavet and Kristo, TransferWise’s co-founders. Expats who are paid in one currency, but spend their money in another.
(2) Freelancers who get a rotten deal from the banks and brokers alike. Susan, an Irish freelance writer customer of ours, has worked out that she was losing hundreds a year when her British clients paid her through PayPal.
(3) British pensioners who have retired to Spain and want to see their retirement funds go further.
(4) Small and medium-sized businesses. Every small business needs to make their cash go as far as possible. This is particularly true of startups who raise overseas investment don’t want to see 5 percent of it go to the banks!
TransferWise is fully regulated by the UK’s Financial Conduct Authority (FCA; formerly the FSA – Financial Services Authority). REF 571669