Thiel’s Valar Ventures makes its first European investment
Thiel, probably best known as the cofounder of PayPal and as Facebook’s first outside investor, also heads up Valar Ventures, a fund focused on companies outside of the US, providing the networks they need to break into the American market. A mission statement on its website graciously concedes that “not all of the best ideas will originate in Silicon Valley”.
TransferWise, then, founded by Estonians Taavet Hinrikus (left) and Kristo Käärmann (right) and based in London’s Tech City fits the bill perfectly – it will be Valar’s first investment in Europe, with previous investments based in New Zealand and Brazil.
The peer-to-peer money transfer business disrupts the banking scene by undercutting traditional currency exchange methods, and has seen impressive growth in its two years since launch – it’s reported that the company has transferred over £125m worth of customer money – over half of that in the last six months.
“Retaining wealth across borders”… and coming to Germany soon
The idea was fuelled when Hinrikus, one of the first employees at Skype, was frustrated by earning in Euros but living in London. He teamed up with Käärmann, then earning in pounds, to put money into each other’s accounts, thereby avoiding annoying bank transfer fees.
Fast-forward two years and TransferWise now employs 33 staff in London and Tallinn and transfers between Euro, British Pound, US Dollar, Polish Zloty, Danish, Swedish and Norwegian Krone. The company recently launched an audacious PR campaign to allow 1000 European startups to transfer up to $100,000 each without any charge at all – which Thiel tellingly supported, along with Skype co-founder Niklas Zennström.
Thiel said: “Innovation in the banking industry typically involves rent-seeking or unsound derivatives, which offer marginal benefits to consumers. TransferWise demonstrates true innovation in banking by enabling its users to retain their wealth across borders.”
Hinrikus added: “We’re delighted to have Peter Thiel as an investor. He really understands how to bring innovation into the banking sector – which is exactly what we’re doing at TransferWise. His investment will help accelerate our expansion plans. This year we’re aiming to add a dozen new currencies and launch the site in new markets including Germany, Spain, France, and Italy.”
Additional investment information: Thiel’s Valar Ventures lead TransferWise’s Series A funding. Existing investors and SV Angel also participated. They join fellow PayPal founder, Max Levchin, IA Ventures, Index Ventures, TAG (Robin Klein and Saul Klein), Seedcamp, Betfair’s former CEO David Yu, and the owner of Le Monde Xavier Niel (via Kima Ventures). This brings the total TransferWise has raised to $7.35m in the two years since its launch.
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