TransferWise just raised a new $26 million investment

TransferWise founders Kristo Kaarmann and Taavet Hinrikus

TransferWise

TransferWise on Wednesday announced it had raised $26 million (£17.7 million) from Scottish asset manager Baillie Gifford.

The online international money transfer service has been rumoured to be raising money for months, with Sky News reporting London-headquartered TransferWise was in talks with Baillie Gifford back in February.

However, the final round is much smaller than previously rumoured. Sky pegged the round at $70 million (£47.6 million) back in February and sources suggested to BI that the round was set to be around that level.

TechCrunch reports that the latest funding round values TransferWise at $1.1 billion (£750 million), marginally more than the $1 billion valuation it is said to have achieved in its $58 million (£39.4 million) funding round last January.

TransferWise declined to comment on Sky's $70 million figure and the $1.1 billion valuation figure when contacted by BI.

Peter Singlehurst from Baillie Gifford says in an emailed statement: "We’re delighted to have invested in TransferWise. Its success to date shows how badly served consumers have been in the past and the real need for what TransferWise offers. The company’s plans for the future are very exciting and the founders have built up an awesome team to deliver them."

Baillie Gifford was founded in 1908 and has £123 billion assets under management. The institution is also an investor in London-headquartered peer-to-peer lending platform Funding Circle.

Taavet Hinrikus, CEO and cofounder of TransferWise, says in an emailed statement: "After just five years, we’ve seen how much TransferWise can help people who need to move money internationally. People are now moving £500 million every month on TransferWise, that means they’re saving themselves over £22 million."

"We want to bring TransferWise to everyone in the world who needs it. It’s great to have Baillie Gifford on board to help us grow even faster."

TransferWise plans to use the funds to expand its currency routes. It currently lets users send money along 600 currency routes globally and is planning to launch another 150 this year. The company recently launched in US-Mexico money transfer corridor, a $25 billion (£17 billion) market.

As well as Baillie Gifford, existing investors in London-based TransferWise include Silicon Valley venture capital firm Andreessen Horowitz, Peter Thiel's Valar Ventures, Sir Richard Branson, Index Ventures, and Seedcamp. To date, it has raised $91 million (£61.9 million).

TransferWise was founded in 2011 as a peer-to-peer money transfer platform. The platform matched demand from people wanting to send money one way with those wanting to send it the other way, saving money by not actually converting the money.

transferwise naked fintech kristo kaarman taavet hinrikus

TransferWiseAs it has grown it has taken on more elements of a traditional FX broker, using liquidity providers when there's not enough demand. It now sells itself on price, promising cheaper transfer costs than banks and high street providers thanks to lower overhead costs (there's no branch network to maintain).

TransferWise's stunts like semi-naked flashmobs, pictured, and bashing of the banks for their lack of transparency helped the service grow explosively. £500 million a month is transferred over the platform monthly.

However, the company's low prices mean it is still unprofitable. Accounts filed earlier this year show it made a loss of £11.4 million ($16.7 million) on revenue of £9.7 million ($13.8 million) in the year to March 31 2015.

The company's occasionally cavalier approach has also seen it run into trouble with regulators in recent months. The UK Advertising Standards Association censured TransferWise for its ads earlier this month, saying statements on how cheap it is were "misleading."

TransferWise's decision to work through the licence of another party in US states rather than wait until receiving its own has also caused problems. It changed partners last September after its former partner PreCash ran into regulatory problems and BI revealed that its new partner has also had trouble with regulators in the past, although before TransferWise got involved with it. TransferWise is currently applying for its own US bank licenses.

NOW WATCH: This is the best Ferrari ever built

See Also:

• Barclays' blockchain tsar is jumping ship to join the 'fintech avengers'

• 5 ways fintech is shaping the future of financial services

• GOLDMAN SACHS: 5 practical uses for blockchain — from Airbnb to stock markets

SEE ALSO: TransferWise might soon infiltrate your regular banking app

SEE ALSO: TransferWise founders tell us why it's OK to be an unprofitable unicorn