London-based TransferWise has become Europe’s most valuable fintech startup after co-founders, staff and early investors have sold off $229m of shares, valuing the company at $3.5bn (£2.8bn).
Co-founders Taavet Hinrikus and Kristo Käärmann are selling less than one fifth of their shares in the company, which they founded in 2011 after being outraged by the cost of sending money between London and their native Estonia.
The share sale underlines the value of this so-called unicorn (a startup valued at $1bn or more). It became one of the few high-profile fintech startups to turn a profit in 2017/18, making £6.2m on revenues of £117m. Reaction to the share sale has been warm and positive, as people actually appreciate the value which this disruptor has brought to the market.
The company has reduced the pressing need to eventually go public by allowing existing investors to cash out some holdings via private sale.
Early investors in TransferWise include Richard Branson and PayPal founders Max Levchin and Peter Thiel as well as venture capitalist Index Ventures. At the time, Branson said that foreign exchange had been “ripe for disruption” for decades.
“It’s encouraging to see entrepreneurs using technology to reinvent the old-fashioned FX industry and make a real difference in the market,” he said. “I see tremendous opportunity to for start-ups like TransferWise to offer breakthrough financial services and products.”
TransferWise cuts the cost of cross-border money transfers by matching people to send money between countries. It processes about $4bn dollars every month for over four million customers, saving them $4 million in bank fees every day. It has expanded beyond consumer payments to new products including services for small businesses.
The company employs about 1,600 people across 11 offices across four continents and plans to hire 750 more staff in next 12 months.