TransferWise becomes Europe’s most valuable fintech, with $3.5bn valuation

The London-based currency operation overtakes UK digital business bank OakNorth after $292m funding round.

TransferWise has sealed a significant funding round valuing the business at $3.5bn, making the currency operation Europe’s most valuable fintech.

The London-based firm raised $292m from new and existing investors. In total the eight-year-old start up has raised $689m from two rounds of funding.

This latest cash call was led by venture capital firms Lead Edge Capital, Lone Pine Capital and Vitruvian Partners. The round also saw existing investors Andreessen Horowitz and Baillie Gifford up their stake in the business.    

The firm said it will use the cash to launch its debit card in the US and Asia this year and boost global staff numbers by almost 50 per cent.

Cut-rate fees

TransferWise uses its platform to process £4bn every month, handling 49 different currencies and 5 million customers in 170 countries.

It says its cut-rate fees save customers £1bn a year, adding that cutting edge technology allows 20 per cent of its international transactions take less than 20 seconds. The business competes against incumbents such as Western Union and MoneyGram.  

The business said in recent years its operations have expanded beyond consumer services to now handle currency dealing for banks, large corporates and small firms. It also launched a debit card in Europe last year.

TransferWise employs around 1,600 staff across 12 offices across the world, and plans to hire more than 750 extra workers over the next 12 months.

The business booked a net profit of £6.2m after tax for the year ending March 2018, while annual revenue jumped 77 per cent to £117m over the same period.

TransferWise was launched by Estonians Taavet Hinrikus and Kristo Käärmann (pictured) in 2011, who previously worked in London for Skype and Delottie respectively, and found moving money around Europe expensive and time-consuming.

Multi-trillion dollar market

Lead Edge Capital general manager Nimay Mehta said: “The world is moving towards a more transparent way of doing business and we want to be part of that. International money transfers represent a multi-trillion dollar market, until now dominated by banks keeping prices artificially high and transfer times slow. TransferWise has changed all that.”

TransferWise chief executive Kristo Käärmann added: “TransferWise is experiencing phenomenal growth and this investment is testament to that. The round provides a way for these investors to buy in, alongside rewarding some of the earliest contributors who’ve been with us since the beginning.”

The latest fundraising means TransferWise is now the most valuable fintech start-up in Europe, alongside London-based Greensill, a provider of working capital finance to small firms, which also hit a $3.5bn valuation earlier this month after securing an $800m investment from Japanese conglomerate SoftBank.

Both of these firms passed the previous European leader, British digital lender OakNorth, which was last valued at $2.8 billion in February.

Other notable investors in TransferWise include British billionaire Sir Richard Branson, US payments service PayPal and the UK’s Merian Global Investors.