The story of Wise, a multi-billion fintech launched by accident



For a fintech company, Wise – which just completed the floating blockbuster of the year in London – “had a refreshing analog birth,” says The Economist. It all started when co-founders Kristo Käärmann and Taavet Hinrikus, two Estonians living in London, met at a party in 2007 and found out they had one gripe in common: the exchange rate scam during money transfer to and from their country of origin. They came up with a plan to solve the problem.

A simple idea and a big break

Hinrikus, one of the first Skype employees, was paid in Estonian crowns which he exchanged for pounds sterling each month; Käärmann, then working as a financial consultant for Deloitte, converted his sterling salary into Estonian kroons to pay off his mortgage at home. The “workaround” they devised was simple but ingenious. “Each month, Käärmann reloaded Hinrikus’ UK account and Hinrikus did the same for Käärmann’s Estonian account, setting the amounts according to the mid-market exchange rate – naturally at no charge.

“None of us wanted to start a business, that was not the goal,” says Käärmann. But the idea quickly spread to other Estonian expats (via Skype chat) who also made big savings. In 2011, the money exchange forum transformed into TransferWise. Käärmann says he realized the fledgling company would fly after an article appeared on TechCrunch explaining it. Within 15 minutes of the post, a customer had started using the service to send money to France from the UK. “It was cool,” he told the Sunday Times. “It was a dozen the first few days and it didn’t stop.”

The couple quit their jobs and self-financed for a year before landing $ 1.3 million in seed funding, Forbes said. Their big break came a year later when the godfather of Disruptors billionaire Peter Thiel led Wise’s $ 6 million Series C fundraiser. It sparked interest from other big guns, including Richard Branson who invested in a $ 26 million round in 2014 for an undisclosed stake. “Today, Wise processes $ 6 billion in cross-border payments each month for ten million customers, claiming to save users approximately $ 1.5 billion per year in bank fees.”

Growing up in Estonia as it regained independence from Russia influenced Käärmann’s entrepreneurial spirit, according to The Mail on Sunday. He was 11 when the Soviet Union collapsed, triggering a “national awakening” in the small Baltic state. “I have seen a country build from scratch. We didn’t have businesses, we didn’t have banks – there was no structure in the economy. Most of the jobs are gone. It meant, he told the Sunday Times, that “all of a sudden, if you needed to fix your car, you had to find someone who could do it – and that’s probably your neighbor. This week he’ll have opened a small garage… the next thing you know, he’s probably going to be buying used cars from Finland, and then he’s the BMW representative for Estonia. This is kind of what happened to everyone. Käärmann himself got his start in his business, planting spruce trees for his forester uncle.

Black swans are an omen

Wise’s explosive debut, valued at £ 8.75 billion ($ 11 billion), saw Käärmann recover $ 2 billion for his nearly 18.8% stake. He’s already gotten a lot richer on paper. Shares jumped a solid 10% on the first day of trading last week, Motley Fool notes, and have not lost momentum – on Monday of this week, Wise was valued closer to 13.5 billion pounds sterling. Some are skeptical about the investment case. But others, like Danish fintech entrepreneur Jeppe Rindom, praise a company that has always “pushed the boundaries” – until now, “without making enemies”. The timing of the initial public offering (IPO), he told Forbes, has a kind of resonance. Wise was born during a “black swan event”: the financial crisis. “It seems appropriate that this is an IPO after a second.”


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