Startups that help people send money to each other or pay for goods and services online have been growing like weeds, fuelled by consumer demand, increasingly ubiquitous connected devices to make and receive the funds, and VCs eager to profit from their growth. Now a startup that has built technology to power fintech startups is raising some money of its own.
Currency Cloud, a UK-based provider of cross-border money transferring services that are in turn used by a number of money transfer and payments businesses, has landed an $18 million round of funding. The Series C round — which brings the total raised by the company since 2012 to $36 million — is notable not only because it underscores progress for the company, but also because of who is doing the investing.
Sapphire Ventures — the now-independent venture arm of SAP — led the round with participation also from Japan’s e-commerce giant Rakuten. Currency Cloud’s existing investors, which include Anthemis, Atlas Ventures, Notion Capital and XAnge Private Equity also participated.
Sapphire and Rakuten are very much strategic investors in this round. Currency Cloud will work with SAP to offer its services in conjunction with those of SAP and specifically to SAP’s business customer base. Rakuten, meanwhile, is making the investment via its FinTech Fund. While those of us outside of Japan mainly know Rakuten for its e-commerce efforts, in Japan the company also offers financial services, and Currency Cloud will be leveraging that when it expands to Asia, likely next year, CEO Mike Laven tells TechCrunch.
The company’s main technology and product is called Payment Engine, and by way of an API, this sits as the essential engine behind a number of other services such as Azimo, TransferWise and xe.com and many others, over 125 in total, who have built businesses around the idea of moving money internationally.
The typical competitor to Currency Cloud is a bank, which will charge more money for similar transfer services, and will often take longer to process them, and the idea of integrating those services by way of an API is virtually impossible because banks typically don’t open up their systems in this way (they are, in a sense, not unlike old school telecoms carriers who suffered the same issue and arguably lost out on potentially interesting data service development).
In contrast, as Laven describes it, Currency Cloud has worked out an efficient tech platform that essentially gives quick and very inexpensive conversions on those currency exchanges so that the companies who use its API can concentrate on building out the more differentiated aspects of their businesses.
Or, as Laven puts it, “In the wholesale market, between highly liquid currencies, it’s about the price of reconciliation, customer acquisition, and integrating larger workflow. We make all those things achieveable. Of course the price of foreign exchange is important but if you lead with that it’s a race to the bottom.”
The growth of companies like these over the last few years (Azimo last week was valued at $100 million; TransferWise raised nearly $60 million earlier this year; xe.com is the most-visited site globally for currency conversions) has had a strong impact on the growth of Currency Cloud. The company processes $10 billion in payments each year covering some 40 different currencies in 212 countries.
Laven says that by the end of 2015, the company will be processing $1 billion per month in transactions. Those transactions, meanwhile, tend to be for around $15,000-$20,000, with “many” extending to $1 million. Currency Cloud, he adds, typically runs its business on “ten percent to twenty percent basis points” — meaning this is the cut that it takes on those transfers.
He adds that most immediately, the funding will go towards Currency Cloud’s ongoing ambition to expand deeper into the U.S. market. Last year, when the company raised $10 million, it opened an office in New York. Now it will be putting more money into building out that business further.
Andreas Weiskam, MD of Sapphire Ventures, is joining Currency Cloud’s board as part of this round.
“Sapphire Ventures is committed to backing high-growth companies with the potential to disrupt markets globally,” he said in a statement. “By enabling transparent, efficient and secure transactions, Currency Cloud is revolutionizing how businesses can move money worldwide. We are excited to draw upon our enterprise DNA and international experience to help Currency Cloud scale and continue pushing the barriers to challenge how financial services are delivered.”
Currency Cloud and Laven are not disclosing the company’s valuation.