An investment consortium including IA Venture, Index Ventures, Max Levchin (co-founder of PayPal) and a group of strategic angel investors are committing $1.3 million (£815,000) to London-based TransferWise, a company founded by a former Skype employee, to fund its expansion into more currencies and markets.

The one-year-old company uses a peer-to-peer model to provide rates for money transfers to customers including workers employed overseas, international students, pensioners living abroad and a number of small and medium-sized enterprises.

Taavet Hinrikus, co-founder of TransferWise, says that TransferWise cuts out the middlemen from a service that is dominated by banks.

Robin Klein, partner at Index Ventures, comments, ‘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.’

The funding round has also seen contributions from Kima Venture, Seedcamp and The Accelerator Group.

TransferWise is located in East London’s Tech City, one of a number of start-ups which are locating in the area.

Eric van der Kleij, CEO of the Tech City Investment Organisation, adds, ‘This funding round 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 in the UK.’