Swiss company builder Centralway is opening a new seed and early stage investment arm that will invest $50 million per year into 20 to 30 startups — including both small seed-stage investment and larger Series A rounds. It said its “preferred case” will be to do a smaller investment at the seed stage, followed by larger investment into the same company at a later round.
The newly formed Centralway Ventures, which will be headquartered in London’s Somerset House, is making its first investment in YC- and Google Ventures-backed Buttercoin: a Bitcoin startup that is looking to disrupt the international remittances market by leveraging the decentralised digital cryptocurrency to shrink cross-border transaction costs.
Buttercoin‘s model is to open a local Bitcoin exchange in each country where it operates — starting with India Europe (where it’s due to launch in around two months’ time) — and then partner with local money transfer businesses to gain legal compliance in the country. Buttercoin’s local partners are purely there to cover off the licences/regulations side and don’t touch the Bitcoin-to-local currency transactions — to keep customer fees low.
Centralway’s investment in Buttercoin bolsters the around $1 million the Bitcoin startup had raised previously — from investors including Google Ventures’ Kevin Rose and Chris Hutchins, Floodate, Initialized Capital and Rothenberg Ventures. Centralway’s investment is at the same conditions as Google Ventures, it said today. Update: Buttercoin has confirmed its total funding to date is now around $1.6 million.
The Swiss company, whose first company-builder creation is a mobile-first banking app called Numbrs, said it sees synergies between its portfolio companies and Buttercoin — specifically flagging up cross-over with Numbrs. “Buttercoin might as well power international low cost transfers for Numbrs,” Severin Ruegger, Centralway’s Managing Partner in charge of the new investment arm, told TechCrunch.
Other key reasons for making the investment according to Ruegger are:
- Global remittances is a large industry that is predestined to be disrupted. Charging 10% for international transfers is unsustainable
- An experienced team and our belief that Buttercoin’s team can execute their ambitious vision
- The technology behind Buttercoin
Although its investment arm is new, Centralway is no stranger to investing in startups — with more than 200 investments under its belt since it was founded in 1999. However Ruegger confirmed Centralway’s investment strategy has evolved towards more partnering with/mentoring of startups — and said its VC arm will incorporate elements of its company builder program.
“One of our key insights over the last years was that traditional venture capital, particularly in Europe, became increasingly more difficult to execute successfully. Startups do not just need money, they need strategic partners, international reach, professional employees, advanced technologies, access to the right lawyers, PR firms, proper accounting standards etc,” he said. “This is the reason why we have started to transform Centralway away from traditional venture capital to company building. We have built up a team of over 100 professionals and implemented standardised shared services (HR, RnD,…) in order to provide startups with much more than money.”
“The new dedicated investment arm and the ventures we invest in can (besides companies we own like Numbrs) profit from the company builder, the over 100 professionals and the shared services, this is new and unique (and different from the past),” he added.