Another fintech startupÂ has raised a growth round to tap into the estimated $25Â trillion market for money transfers. London-based Currencycloud, which builds tools forÂ payment companies to use by way of an API to enable remittances and money exchanges across borders, has raised Â£20 million ($25 million) in a Series D round of funding led by Googleâs GV, its first fintech investment in Europe.
The news comes one day after U.S.-based Veem (formerly Align Commerce)Â raised $24 million to expand its international remittance services. GV also participated in that funding round.
It brings the total raised by Currencycloud to around $61 million, with other investors in this round including previous backersÂ Notion Capital, Sapphire Ventures, Rakuten FinTech Fund, and Anthemis.
Currencycloud todayÂ works with about 200 customers in 35 countries, which CEO and co-founder Mike Laven said in an interview translates to âmillionsâ of companies and individuals processing payments, with about $25 billion in payments processed to date through its platform. Its customers range from startups like Azimo and Revolut through to larger companies like Travelex and Standard Bank.
In the large and fragmented world of money transfers â incumbents include Western Union and MoneyGram; and the very wideÂ pool of startups includes Veem, WorldRemit (valued at $500 million),Â Xoom (acquired by PayPal in 2015Â for $890 million), Azimo, Regalii, Remitly and TransferWise (valued at $1 billion+) â Currencycloudâs particular niche is that itâs building the mechanics for how to move money between specific markets without ever selling that service to end users itself.
Instead, it packages its remittance infrastructure â finding exchange rates, transferring funds between two end points and meeting local compliance at both ends â by way of an API thatÂ is used by hundreds of other remittance companies to create services for individuals abroad to send money to family back home (wherever that might be); or for businesses to payÂ money to each other; and so on.
The issue of fragmentation, and the complexities of the interconnections to make money transfers work correctly, were one reason why GV was interested in backing the company.
âItâs a huge problem to solve, not just switching currency but moving across borders and staying true to compliance,â saidÂ Tom Hulme, a partner for GV in London, in an interview. As with the growth of soÂ many other markets, he noted, ânow itâs all about developers,â meaning that complexity is being solved by technical solutions, and Currencycloud is providing the tools to help do that.
The opportunity is alsoÂ big enough that the small margin that Currencycloud makes on each transaction is, in aggregate, enough to propel the companyâs business forward.
The company is not disclosing current revenues or valuation in this round, but a fewÂ years ago, when Currencycloud raised $10 million in 2014, it noted that it made only $3 million on transfers of about $400 million in aÂ year, working out to 0.75 percent margin. Fast-forward to today; Laven told me that it processed $6 billion last year. Working out a similar percentage, this means revenues would have grown to $45 million (thatâs assuming the percentages have stayed constant).
This latest round will be used to continue building out Currencycloudâs business, specifically by building out its business in the U.S. to court more customers on that side of the pond, both in terms of companies served and infrastructure.
âThe U.S. cares more about transfers to Canada, Latin America than Europe does,â said Laven in an interview. âEurope cares about Great Britain.â Both regions have equal interest in other regions like Asia and Africa, he added.
The other aspect needed to grow the U.S. business is to improve what he called â24/7 infrastructureâ simply to make sure that there is support for customers wherever they may be.
The company had been aiming to raise only about Â£16 million, he said, and in the end expanded that to Â£20 million and could have easily added more, âbut we didnât want to give up the equity.â
In fact, LavenÂ said that while thereâs been a big question mark hanging over what might happen to startups in the U.K. in the wake of Brexit, from what heâs seen, there is still a lot of opportunity.
âIÂ think the climate is okay right now for raising money,â he said. âThere was no Brexit pushback. My feeling is that things are okay right now, no evidence of a wait-and-see attitude. Weâre a solid company with a good track record and people didnât have any concerns other than the normal due diligence concerns.â
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