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Richard Branson invests in money exchange business
Richard Branson has joined PayPal cofounder Peter Thiel in backing Shoreditch-based money exchange business TransferWise.
In its second round of funding, TransferWise raised R269 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 R355 million 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 R323 million 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,” says Branson.
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 three and six percent commission to transfer money abroad. By cutting out the banks, TransferWise offers a flat charge of R18 on transfers up to R3 600, and a commission of 0.5 percent on all higher transactions.
The firm recently transferred over R18-billion of customers’ money by April this year, a jump from R2.2 billion a year ago, after TransferWise grew its currency routes to 252. “This has saved our customers over R810 million in banking fees,” Hinrikus says.
Hinrikus added the R269 million 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”.