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Wise like TransferWise. Why is Wise Going Public in London?


It all started in London when Taavet Hinrikus, Co-Founder of TransferWise, was still working for Skype. Back then he had to pay out his Estonian salary into British pounds. Fees, bad customer service, you name it, he had to put up with it. And having just been part of something as revolutionary as Skype, he thought he’d solve the international payments problem once and for all by creating TransferWise.

Of course, if it was that blatantly obvious what the solution to the out-dated payments problem was, then Taavet wouldn’t have stumbled onto a solution that has disrupted international payments, so well. PayPal and Bitcoin were already around when he started TransferWise, but neither of them were able to solve the problems surrounding high charges and bad customer service quite like Taavet and his team.

Fast forward more than 10 years.

Last Thursday, the Estonian firm announced they were planning a direct listing in London, stating how this would make it ‘fairer, cheaper and more transparent’ for investors. A sentiment echoed by many in the Fintech eco-system.

The Bloomberg story amusingly comments on how the ‘startup known formerly as TransferWise may not be a fintech behemoth like Adyen, but it makes a tidy enough profit.’ Refreshing thought that a proper Unicornis able to represent Europe and still be profitable, it doesn’t seem to happen much anymore.

While TransferWise is now ‘Wise’, it’s also very profitable. In 2011, Kristo Kaarmann joined Taavet and has helped make the company profitable year after year since as far back as 2017. On the company’s site, Kristo explains how the team have always had aspirations of going public.

‘We want to do things differently,’ Kristo states, ‘by doing a direct listing instead of the normal IPO.’

Who are the Wise Investors behind TransferWise?

Back in 2014 TransferWise was still gaining market presence in the UK and other countries. And at a TechCrunch event back in 2015, Taavet came in for a roasting about some of the early marketing tactics used by the company:

It was a novel way to highlight the problems that consumers were facing with banks and their charges. And while they were still scaling up, they already had a run-in with the UK’s Advertising Standards Authority. This didn’t put them off, they continued to scale.

Taavet and Kristo have a unique approach to business. Having met Andreessen Horowitz early in their careers, they first gained Peter Thiel’s Valar Ventures and then Richard Branson as investors during their early funding rounds. They were barely 3 years old with $33 million of funding by 2014.

Peter Thiel was quoted back in 2013 when he made his initial investment saying:

TransferWise demonstrates true innovation in banking by enabling its users to retain their wealth across borders.”

Branson has also explained on Virgin’s site why he got involved with TransferWise back in 2014:

“I’ve spent my career tackling the status quo and the Virgin brand tries to turn out of touch industries into businesses that help consumers. We’re doing that in financial services with our challenger bank Virgin Money. Transferwise are approaching this from another angle, helping people to do business without borders. In our increasingly interconnected world, that is exciting to me.”

In 2015 Andreessen Horowitz finally joined the party with a further $58 million of funding. It was the firm’s first investment in Europe, and it was Ben Horowitz first ever board seat in Europe, when he joined TransferWise’s board of directors.

“We are thrilled to be backing Taavet and Kristo. They discovered an important secret and are uniquely prepared to pursue it. Not only is their solution 10 times better than the old way of exchanging foreign currency, it could not have come at a better time. We see massive opportunity for new financial institutions like Wise.” – Ben Horowitz

Is London a Wise choice?

Taavet has been a long-term fan of London as the global leader of Fintech. And even though the firm posted that about 26% of revenue came from the U.S when it announced results last year, he still seems to want to tie the future of the company with that of London.

Taavet recently tweeted about the listing of UiPath, another Unicorn from the EU, one that chose the New York Stock Exchange to list.

The answer lies in what Taavet has previously commented on as a ‘particularly open approach by the government in the UK to the topic of entrepreneurship’.

As recently as last December, Boris Johnson hosted a session with the bosses of some of the top Tech firms in the UK, Kristo attended on behalf of TransferWise. It was clear that it was important to the UK government that companies like TransferWise list in London. The significance of listing on the London exchange would be that TransferWise could feel more like a ‘behemoth’ in the City than on Wall Street.

While the listing of so many Unicorns in the U.S. has clearly spurred Taavet and Kristo on with their plans, their may be benefits of listing in London that are not clear at first glance.

How and When can you buy Wise Stock?

It isn’t such a simple question to answer.

It was just under a year ago that TransferWise announced their intent to launch investment products. Ironically this hasn’t come in time for the public listing.

For now it appears that the shares will be limited to a maximum of 100,000 customers who are already current customers. The project is called ‘OwnWise’ and if you haven’t signed up for a TransferWise account yet, then don’t miss out. It might be months before you can get your hands on any Wise stock through the normal brokers.

While Adyen might be worth over $68 billion with their high profit margins, Wise’s similar sales numbers are encouraging. The firm will be worth at least $5 billion when they debut. If you add on all these nice shiny extras that Taavet and Kristo are planning, then there is a lot of additional revenue forecasted for Wise in the near future.

As Kristo is so fond of repeating in most of his messages: ‘Onwards!’

Author: Andy Samu

#TransferWise #Wise #AndreessenHorowitz #PeterThiel #RichardBranson #PublicListing #Profitability #London #WiseGroup #Stock #Shares #DirectListing

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