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The startup’s new backers appear to be hand-picked to include the best brains who have been disrupting financial services industry. Business angels include PayPal co-founder Max Levchin, Shamir Karkal of Simple, a startup which takes on retail banking, Errol Damelin of a new generation online credit institution Wonga and a former CEO of Betfair David Yu amongst others.
The venture funds who invested in this round include Index Ventures which needs no introductions (portfolio companies include Skype, MySQL, LoveFilm, Betfair, Last.fm, Ozon.ru and many others), prolific French seed investor Kima Ventures, as well as Seedcamp and Accelerator Group.
The fintech startaup reduces the cost of international money transfers by conducting bank transfers between local accounts that belong to Transferwise. So if the client sends money from the UK to Germany, Transferwise will transfer the money from the client’s UK account to the Transferwise’s UK account, and will pay out German recipient from its German bank account. As far as currency exchange goes, it appears to simply undercut the commission that a bank charges.
In February 2012 TransferWise reported Euro 10.1 million in currency exchange volume during the first year of operations without any marketing efforts. It has completed 5,500 transactions. Based on their online calculator I estimated that they made around Euro 48,000 in revenue.
A Seedcamp winner, Transferwise joins other well-funded Estonian startups such as mechanical engineering community GrabCad (total of $5.5 million funding, accelerator programs of Seedcamp and TechStars), new generation of ERP and ecommerce software for SMEs Erply ($2.1 million funding, Seedcamp) and a virtual fitting room Fits.me ($3.7 million).
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