TransferWise Ltd. has just taken a flying leap to surpass other European fintech start-ups.
The firm managed to more than double its valuation, bringing it to $3.5 billion in a fundraising round.
Dodging an IPO
TransferWise was able to delay the requirement for an initial public offering (IPO) by bringing its valuation to an astounding $3.5 billion in its latest fundraising round. This round was led by Lead Edge Capital, in addition to Vitruvian Partners, Lone Pine Capital and funds managed by BlackRock Inc.
They join existing investors, which include Baillie Gifford & Co., and Andreessen Horowitz, which have increased their stakes in the London-Based firm.
“Back in the old days, we would have been a public company by now,” said TransferWise chairperson and co-founder, Taavet Hinrikus. He pointed out that it is still possible that his company may one day go public. However, the latest round of fundraising has delayed the need for that step by several more years.
Underscoring the Fintech Startup Boom
The impressive share sale of the 8-year-old company places the spotlight on the fintech startup boom. It underscores the way in which these cutting edge firms are angling to take on traditional financial giants. They rival conventional established companies by offering simpler, more convenient solutions at lower costs.
TransferWise, for instance, has more than 5 million users. Moreover, it manages over £4 billion ($5.1 billion) in payment transactions each month. The company has been profitable since 2017, according to Hinrikus. The share sale made it possible for employees and early individual backers to convert their equity into cash, he added.
In TransferWise’s November 2017 round of fundraising, it brought in $280 million and was valued at $1.6 billion. Now, it has leapfrogged its way right over other fintech start-ups that have not yet gone public. This includes Swedish payment firm Klarna Bank AB, as well as Revolut Ltd., and Germany’s N26 GmbH. Similarly, it is now valued at three times more than London-based Funding Circle Ltd., a startup that went public in 2018.
“I am super excited that we can turn this monopoly money for employees into real dollars,” said Hinrikus in reference to the TransferWise stock options it issues to all its employees.
It is worth pointing out that none of the institutions invested in TransferWise sold their shares at the opportunity of the offering. Moreover, both Hinrikus and Kristo Kaarmann, the other co-founder of the firm, the company’s CEO, retained their shares. Together, they still retain more than 80 percent of TransferWise.
The recent sale of shares for fundraising brought the total investor stake in Transferwise to $689 million. This includes the totals from both the primary and secondary markets, said the company at the time.
The London-based company currently employs about 1,600 people around the world. Its plan is to increase that figure by 750 employees throughout the next year.
It is currently hiring in London, as well as new York, Budapest, Singapore, and Talinn, Estonia, in addition to a sprinkling of other locations. It is specifically seeking data scientists, engineers, and talent to fill various roles in their product development.