The British payments start-up TransferWise has kicked off talks about a new fundraising that will see its valuation soar past £1bn for the first time.
Sky News has learnt that TransferWise is in detailed talks with investors, including several prospective new backers, about a funding round that could double the $ 117m (£90m) it has already raised during its six-year history.
Sources said this weekend that the payments company, which now sees more than £1bn transferred using its app each month, could finalise its new funding within a matter of weeks.
TransferWise is understood to be targeting more than $ 100m (£77m) of new capital, with its valuation including the additional funds reaching about $ 1.5bn (£1.15bn).
If completed, it would represent a big vote of confidence in one of the UK’s most prominent financial technology – or fintech – businesses at a time when the funding of such companies is being closely watched to discern international investors’ views about Brexit.
It would also come amid a frenzy of deals in the global payments industry as new technology drives down costs and improves speed and efficiency for customers.
In recent weeks, Worldpay has agreed a £7.4bn sale to Vantiv of the US, while Paysafe, another London-listed company, struck a deal on Friday to be bought by Blackstone and CVC Capital Partners, the buyout firms.
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.
Founded by a pair of Estonian former Skype employees, they announced this month that they were swapping roles, with Taavet Hinrikus becoming chairman and Kristo Kaarmann taking over as chief executive.
In a blog-post explaining the move, Mr Hinrikus said he and his co-founder decided to set it up “because of our own frustration – banks were overcharging and under-serving for a simple service, and lying about it”.
He also raised the prospect of following the route pursued by companies such as Facebook and Snap Inc, adding: “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.
Nevertheless, it is one of relatively few British technology companies to have achieved so-called unicorn status, meaning it is valued at more than $ 1bn (£800m).
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 on the talks with investors.