Five-year-old TransferWise becomes London’s latest $1bn tech biz

It’s another feather in the cap for London’s thriving fintech scene.

(Fintech means financial technology, and London is arguably the world’s leading hub for it, thanks to the intersection of our mega-powerful finance industry and our blossoming tech scene.)

TransferWise, a peer-to-peer currency exchange and money transfer service, has just raised $58m.

Investors were led by Andreessen Horowitz, an early Facebook backer, and included previous investors Sir Richard Branson, PayPal founder Peter Thiel, Index Ventures, IA Ventures and Seedcamp.

The deal reportedly values TransferWise at around $1bn.

It’s a boon for London, which only last week saw another London-based tech business, music identifying app Shazam, valued at a reported $1bn.

The $58m raised by TransferWise will be used to fuel internal expansion, including a new US office next month, followed by new offices in Germany and Australia.

It will also add 300 new currencies to its platform, more than doubling the 292 currencies already offered by the service.

TransferWise: your need-to-know

Founded: 2010, in London. Headquartered at Old Street.

Founders: Kristo Käärmann, CEO (above, left), and Taavet Hinrikus, executive chairman (above, right).

Käärmann comes from accountancy and auditing, having worked at PwC and Deloitte on updating their systems and processes.

Hinrikus was Skype’s first employee, and has since acted as an angel investor and advisor for a range of businesses.

Institutional investors: Include IA Ventures, Index Ventures, Valar Ventures, Virgin, Kima Ventures, Seedcamp.

Private investors: Include PayPal founder Peter Thiel, early Facebook investor Andreessen Horowitz and Sir Richard Branson.

How TransferWise works: Here’s the blurb from its website: “Sending money abroad is deceptively expensive, thanks to the hidden fees we’ve all been forced to pay. The banks claim “free money transfers”, “0% commission.” Sounds like money’s already flowing freely, but far from it. It’s pure propaganda.

“TransferWise removes all the wrongness, letting people send money abroad at the lowest possible true cost. Using only real exchange rates and tiny not-hidden-fees. Headaches averted, and a revolution sparked.”

TransferWise says it can save you up to 90% of bank fees, claiming to offer transfers that are 10 times cheaper than banks.

Banks charge 5% on “hidden fees”, it says, while TransferWise only charges 0.5%.

Want more? Read our 2012 interview with TransferWise co-founder Taavet Hinrikus.