Facebook investor Thiel leads US$6m investment in TransferWise

14 May 2013

Veteran tech investor and PayPal co-founder Peter Thiel

A venture fund established by Peter Thiel, the first investor in Facebook and one of the leading investors in the Collison brothers’ Stripe, is leading a US$6m investment in London-based start-up TransferWise.

The deal marks the first investment in Europe by Thiel’s Valar Ventures. Valar joins 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 US$7.35m in the two years since its launch.

TransferWise, based in London’s Tech City, has seen spectacular growth in the two years since it launched in 2011. The company has transferred more than stg£125m worth of customer money – and more than half of that has been in the last six months.

TransferWise was founded by Taavet Hinrikus, Skype’s first employee and director of strategy, and Kristo Kaarmann, previously at Deloitte Consulting and PwC.

The business started with the two founders, making transfers between just British pound and euro. It has since added a further 33 members of staff, and transfers between euro, British pound, US dollar, Polish zloty, and Danish, Swedish and Norwegian krone. The firm continues to grow between 20-30pc a month.

“We’re delighted to have Peter Thiel as an investor,” said Hinrikus. “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.”

Thiel co-founded PayPal with Levchin and served as its CEO. He was the first outside investor in social networking site Facebook.

Thiel is also one of the first early investors in Stripe, a Silicon Valley e-payments start-up led by Limerick brothers John and Patrick Collison, which a year ago SecondMarket.com ranked, alongside Pinterest, as one of Silicon Valley’s rising stars, giving it an informal valuation of US$1bn.

Commenting on the TransferWise investment, 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.”

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years