The globe-trotting, border-crossing life of a young European tech company: run a development team in Tallinn, open an office in London, jet to a conference in Berlin…
Wonderful, for those who enjoy travel and access to international talent. Expensive and frustrating when it’s time to move money between countries.
Today, TransferWise – an international money transfer startup founded by Taavet Hinrikus and Kristo Käärmann – is kicking off a campaign to allow 1000 European startups to transfer up to $100,000 each without any charge at all.
Hinrikus – Skype’s first employee and former Director of Strategy – says it’s a way for the team to give back to the startup and tech community: “I remember all too well how depressing it was to throw away the precious little resources we had in the early days of Skype,” he says. “Working between London, Tallinn and Stockholm meant we were constantly wasting money on banking fees.”
Skype co-founder Niklas Zennström and PayPal co-founder Peter Thiel are among 25 individuals and organisations lending their names to support the campaign.
The campaign – who can apply?
Any “startup” in Europe can apply for a Transferwise voucher as long as they’re less than two years in from their launch and not already customers (first-in, first-served). Registration closes on 10 May 2013; the vouchers expire on 10 April 2014.
Right now, TransferWise supports the euro, pound, Polish zloty, and Danish, Swedish and Norwegian krone. It also supports transfers to the US dollar; transfers the other way and additional currencies are on the way.
The company’s normal charges are €1 or £1 for transfers of up to €200 or £200 and half a per cent for anything greater.
TransferWise – “Skype for money transfers”
During his time at Skype, Hinrikus (pictured below) earned euros but lived and spent his earnings in London. At one point, he estimates now, international money transfer fees set him back at least €1000 per year.
So he teamed up with Käärmann, who earned pounds but had a mortgage to pay in Estonia. The pair agreed to put money into each other’s accounts using the same “real” mid-market exchange rates used by banks but avoiding bank transfer fees.
That idea grew to become TransferWise, which now employs nearly 30 people in London and Tallinn and performs a similar peer-to-peer service for thousands of customers in Europe.
It usually beats banks – which Hinrikus says typically charge about three per cent – and offers a best price guarantee to keep ahead of other foreign exchange traders.
For those concerned about money laundering and other dodgy international dealings – TransferWise is registered as a payments company with the UK Financial Services Authority and, according to this interview in The Economist, must comply with the same “know your customer” rules as any commercial bank.
So far, according to Hinrikus, TransferWise has now processed £100m worth of transfers, up from £50m in December. Customers – which The Economist estimated at “10,000 odd” in January – include international university students, British pensioners who’ve retired to the south of Spain and a growing community of business users.
“Adzuna – a marketplace for jobs; PeerIndex, who had developers back in Eastern Europe… We have Mendeley, for example, who used us to exchange a seven digit amount a couple of weeks go,” Hinrikus says. “People who have suppliers abroad…”
He hopes those who join through the startup campaign will use the money they save to grow and create jobs: “It’s incredibly hard to build a business and as such we all need to support each other,” he says. “Every little thing helps.”
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