Richard Branson has joined PayPal cofounder Peter Thiel in backing Shoreditch-based money exchange business TransferWise.
In its second round of funding, TransferWise raised $25m from backers including Peter Thiel’s Valar Ventures, Index Ventures, Sir Richard Branson and other high profile technology investors. This takes the total raised by TransferWise to $33m since the firm was founded in early 2011.
It also marks Branson’s second recent investment in a financial start-up. In May, Branson participated in a $30m investment round in US-based BitPay, the leading payment processor for digital currency bitcoin.
‘Financial services such as foreign exchange have been ripe for disruption for decades and it’s great to see TransferWise bring transparency to the market,’ Branson said today.
TransferWise was started three years ago by Estonian friends Taavet Hinrikus, who was Skype’s first employee, and former management consultant Kristo Käärmann.
Its peer-to-peer service means it can offer significantly cheaper and more transparent money transfers. Banks charge between 3-6% commission to transfer money abroad. By cutting out the banks, TransferWise offers a flat charge of £1 on transfers up to £200, and a commission of 0.5% on all higher transactions.
MT recently reported that the firm had transferred over £1bn of customers' money by April this year, a jump from £125m a year ago, after TransferWise grew its currency routes to 252. ‘This has saved our customers over £45m in banking fees,’ Hinrikus said.
Hinrikus added the $25m would be used to step up its marketing efforts and highlight the ‘excessive and opaque fees applied by banks and currency brokers for sending money abroad.’
It will also be used to expand the team from 100 employees to 200 by the end of next summer.
TransferWise said it couldn’t provide a breakdown of how much each investor put in, but that Branson’s investment was 'significant'.