The entrepreneurs who founded TransferWise are poised to land windfalls worth millions of pounds by selling their first shares in the company they founded six years ago.
Sky News has learnt that Taavet Hinrikus and Kirsto Kaarmann, two former Skype employees, are expected to offload a small chunk of their stakes in the payments app as part of a funding round valuing it at $1.6bn.
Mr Hinrikus and Mr Kaarmann, who recently swapped roles to become chairman and chief executive respectively, are thought to own roughly 40% of TransferWise between them – meaning that on paper they are likely to be worth more than $300m each.
Sources close to the company said on Monday that substantial demand from new investors for TransferWise’s shares meant early investors, the founders and employees of more than three years were being allowed to sell up to 20% of their shareholdings.
TransferWise’s Series E fundraising is expected to be concluded in the next three weeks, with one of Silicon Valley’s most prominent investors, IVP, joining the ranks of the company’s existing investors.
An insider said the company was happy to provide liquidity to early employees, many of whom had taken pay cuts when they began working for it.
IVP, whose roll call of deals includes Snapchat parent Snap, Twitter and Netflix, is to invest tens of millions of pounds in TransferWise, with a number of other new shareholders also coming on board, according to sources.
TransferWise has previously raised a total of about $117m (£90m) – a significant sum for a British technology start-up.
Its latest deal will establish it as a “unicorn” – a tech start-up worth at least $1bn – reflecting a frenzy of international interest in the global payments industry as new technology drives down costs and improves speed and efficiency for customers.
TransferWise provides exchange rates to users which are more competitive than most traditional competitors by using an element of peer-to-peer funding to cut costs.
Instead of actually converting money, it pairs users wanting to buy a currency with those wanting to sell it, enabling them to save on often-costly fees.
TransferWise is used by more than one million people to move money internationally, which it claims saves them more than £1.5m each day.
It is now profitable on an annualised basis – an important milestone for any tech start-up.
The company boasts a 10% market share in the UK, and expects to reach $100m (£77m) in revenue this year.
TransferWise’s existing investors include some of the biggest names in Silicon Valley, including Andreessen Horowitz, one of the early backers of Facebook.
Sir Richard Branson, the Virgin Group founder, is also a shareholder.
The company last raised money in May 2016, when the Edinburgh-based fund manager Baillie Gifford led a $26m funding round.
Since then, Andreessen Horowitz has increased its stake in the company by acquiring shares held by TransferWise’s initial ‘angel’ investors.
Mr Hinrikus, whose move to the chairmanship of Transferwise will lead to him taking a less hands-on role, recently raised the prospect of following the route pursued by companies such as Facebook and Snap Inc.
In a blog post earlier this summer, he wrote: “What was an idea seven years ago is now a company that will do $100m in annual revenue. Next up $1bn in revenue?
“In a few years it will be time to think seriously about becoming a public company like the strongest and most trusted financial institutions are.
”But when we do that we will explore that through our own lens – how will it help our customers? How will it help us achieve our mission faster?”
TransferWise’s expansion has seen it launch into markets including China and Sri Lanka, while it has also signed a partnership with Number26, a start-up which enables users to open a bank account within eight minutes.
Its growth has not, however, been untroubled.
The company was fined by US authorities for operating without the correct licence, and it was forced to modify its advertising claims in the UK.
The latest fundraising comes amid efforts by rival European start-up hubs such as Berlin to poach business from the UK amid uncertainty about visa restrictions in the wake of the Brexit vote.
A TransferWise spokeswoman declined to comment.
Source: Sky