A look through TransferWise’s early pitch deck

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A look through TransferWise’s early pitch deck

Nearly seven years ago, TransferWise was readying the launch of its international money transfer service with bated breath. Co-founder Taavet Hinrikus would later tell me that he wasn’t entirely sure at the time if anyone would use the product. It certainly put the minimal in MVP.

The startup’s first media coverage (on TechCrunch, of course) led to the first $1,000 being transferred. Fast-forward to today and TransferWise is moving $2 billion every month.

A few months after launch, however, the U.K. and Estonia-based startup was still trying to raise its first seed round. Targeting a mere $1 million, Hinrikus tells me it proved by far the hardest to close.

The company has since gone on to raise nearly $400 million and counts the likes of IVP, Richard Branson, Andreessen Horowitz, and Baillie Gifford as investors. Today TransferWise is reportedly valued at $1.6 billion and is very likely a candidate for IPO in the next couple of years.

That makes it a good time to have a look back through this European unicorn’s early pitch deck, dated 31st of May 2011. Alongside each slide, I’ve added my own commentary based on an interview with Hinrikus in October.

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Peer-to-peer currency exchange

TransferWise’s original pitch (or is that shtick?) was that it offered cheap international money transfer via what it called “peer-to-peer” currency exchange, a claim that was certainly partially true but for years went largely unchecked.

In fact, coupled with Hinrikus’ previous early role at Skype, this led to the startup being cleverly marketed as the “Skype for currency exchange,” a line that I (rather embarrassingly) swallowed whole.

Not much of this first slide has survived, however: you’ll be hard pressed to find the peer-to-peer description in TransferWise’s marketing today and its orange and red logo is sadly long gone.

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Currency Exchange

Every good pitch deck needs the set up. What is the status quo and how do you hope to disrupt it?

In 2011, most people transferred money abroad in two ways: either via money exchange services such as Western Union or via their bank. It was the latter that TransferWise had its targets set, highlighting the hidden margin in a bank’s own high exchange rate, in addition to a fee.

“You exchange with peers at mid-market rate,” reads the TransferWise pitch deck. In return, it would charge a simple flat rate fee of £1. That, Hinrikus told me, served as a “good and simple message” and worked while the startup capped transfers at £2,000. However, the pricing was a little naive, he admits, and has since been replaced by a low percentage fee, depending on currency.

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How does it work?

In one sense, this is exactly how TransferWise works today, with a few huge caveats:

Hinrikus says the early product was a very rough MVP, even by the standards of the day, and in retrospect is kind of embarrassing, conjuring up that well-cited Reid Hoffman quote.

He also told me that none of the processes were automated back then. Instead, every evening co-founder Kristo Kaarmann would record each pending transfer in a spreadsheet and move the funds manually.

“Yes we started off all manual and that is the right way to test if stuff works, obviously once you hit volumes you’ve got to be quick in automating,” says Hinrikus.

The takeaway: doing unscalable things to scale.

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Traction

This slide on traction should have spoken for itself, but this was 2011 and seed money in Europe was still in relative short supply, at least by today’s standards.

Notably,  just a few months after launch over £1 million had been sent through TransferWise, with 70 percent repeat customers. That is dwarfed by the over £1.5 billion per month transferred today.

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Roadmap

As well as just two currencies supported (in contrast to 45 currencies today), money could only be sent to TransferWise via bank transfer. Card payments were still on the to-do list (note: Stripe wasn’t even founded till the following September).

It is also worth noting that even in early 2011, TransferWise had plans for an API. As I recently wrote, it wants to be the platform for moving money around the world and a consumer-facing app was always just the start.

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Competition

Competition was plenty even back in 2011, while today the space is even more crowded. Money exchange is arguably a commodity service and is a feature of a number of other fintech startups’ products.

However, the incumbent banks still hold a large share of the money exchange market, which remains ripe for the taking. And, arguably, TransferWise has built one of the best brands in the business.

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Team

At the time of TransferWise’s seed fundraising, the team was just six people! Today over 800 people work at TransferWise, although it is hard to fathom what they all do.

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Financing

TransferWise was targeting seed funding of around $1 million based on the exchange rate of the day, an amount Hinrikus says was on the high side and possibly contributed to the difficulty he and Kaarmann had closing.

Up until that point, the startup had been funded by about £25k of the pair’s own cash, and small pre-seed funding from Seedcamp, who were bullish on the burgeoning company.

That would pay off greatly for Seedcamp this year, after the sale of its stake in TransferWise helped contribute to a 4.1x return for Seedcamp’s 2010 fund II.

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Questions?

I’m sure there were lots of questions. But, as they say, the rest is history.

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Bonus: a photo from early summer 2011

Left to right: Hinrikus, Kaarmann, and an early TransferWise developer. All have aged considerably since.

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