HomeBusinessFinanceFounders Of Money Transfer Service Wise Become Estonia’s First Billionaires After London...

Founders Of Money Transfer Service Wise Become Estonia’s First Billionaires After London IPO

The cofounders of cross-border payments startup Wise have become Europe’s latest tech billionaires after its debut on the London Stock Exchange Wednesday.

With prices set at $11 (£8) per share through a direct-listing auction process, Kristo Käärmann’s nearly 18.8% stake in Wise gives him an estimated net worth of $2 billion, making him the first Estonian to reach the billion-dollar threshold on the Forbes list. His Estonian cofounder Taavet Hinrikus has a nearly 10.9% stake worth $1.1 billion.

Founded in 2011, the startup formerly known as Transferwise offers low-cost money transfers across 56 different currencies. Käärmann and Hinrikus started Wise after having become, they said, “sick of losing money to our banks” in the fees they paid to send money between London—where they were working—and their native Estonia. 

Today, Wise processes $6 billion in cross-border payments every month for 10 million customers, claiming to save users around $1.5 billion a year in bank fees. In comparison with Western Union’s international money transfer service, for example, Wise claims that sending £1,000 (GBP) to the U.S. is US$18 cheaper using Wise.

Today’s IPO makes Wise the largest tech company—based on a market capitalization of $11 billion—to list on the London Stock Exchange.


Wise’s IPO comes on the heels of rising revenues and valuations for a spate of fintech and payment companies during the global pandemic lockdown. In Europe alone, investors have driven the value of online payment startup Checkout.com from $5.5 billion in June 2020 to $15 billion in January 2021, while pay-by-installment fintech Klarna tripled its valuation in just six months from $11 billion to $31 billion in March.

Wise has tapped into growing demand. In the year through March 2019, the company posted revenues of £177.9 million, followed by £302.6 million in revenues in the year through March 2020 and £421 million in the year through March 2021, a 136% increase in just two years. In July 2020, Wise hit a $5 billion investor-led valuation—making it one of Europe’s top fintechs.

The revenue growth was fueled by a steady increase in transactions. In fiscal 2019, Wise’s 6 million customers processed $37 billion in cross-currency transfers (business and personal); while in fiscal 2020 that number grew to 8 million customers, and $58 billion in cross-currency transfers. In fiscal 2021 Wise hit 10 million customers and $74 billion in payment volume.

Two Billion, 1.3 Million

The story of how Wise began is a parable on the value of small-scale personal financial problem-solving.

As the founders told Forbes in 2016, Wise grew out of a money-saving arrangement hatched by the two London-based Estonians. While Käärmann worked at Deloitte and Hinrikus worked at Skype, the pair devised a system to avoid paying fees of anywhere between 10% and 12% on basic monthly transactions where one person needed Estonian kroon, and the other needed British pound sterling. “We realized there is actually no need to move the money. No need to make an international transfer because the money already exists where it needs to,” Hinrikus said in 2016.

The Estonian software engineers devised a simple solution: Hinrikus would transfer euros from his Estonian bank account into Käärmann’s Estonian account, while Käärmann would transfer pounds from his British HSBC account to Hinrikus’ at Lloyds. This saved them the international transfer fees, as well as on currency drag since they used the real exchange rate, known as the midmarket rate.

The idea spread to other Estonian expats (via Skype chat), who saw big savings in exchanging money this way. The Skype-linked money exchange forum morphed into TransferWise in 2011. The pair quit their jobs and self-funded for a year before landing a seed funding round of $1.3 million.

The startup gained global attention a year later, when billionaire Peter Thiel led Wise’s $6 million series C funding round. In 2014, billionaire Richard Branson invested in a $26 million round for an undisclosed stake.

Jeppe Rindom, founder of Danish expense fintech Pleo, told Forbes that Wise was born during a “black swan event” during the financial crisis, adding, “it feels fitting that it would IPO following a second.” On their success, he says: “[Wise] challenged boundaries without making enemies, worked with the media without spinning into hype, and invested in their culture, not just their product.”

The listing also comes as good news to Wise’s 2,400 employees worldwide, who will benefit from an employee option share pool of 9.8% of total shares. 

Meanwhile, Wise has expanded beyond money transfer services to offer multi-currency bank accounts and business accounts designed for operating globally. Nudging into the space operated by traditional banks, it’s issued 1.6 million debit cards.

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