London-based peer-to-peer travel money startup WeSwap has raised £6.5 million ($8.4 million). Boutique investment firm Ascot Capital Partners led the round while existing investors EC1 Capital and IW Capital took part in the deal. The funding round was announced on the same day as rival travel money startup Revolut confirmed a near identical funding raise, bagging £6.75 million from venture capitalists. The two deals show that the market funding for fintech — financial technology — startups is still alive in the wake of the UK's surprise decision to leave the European Union. David Page, CEO of Ascot, says in an emailed statement:"The UK has always been, and will continue to be, a world-class financial services and technology hub with world-class resources and assets." WeSwap cofounder and CEO Jared Jesner told BI: "There’s a lot of general concern [about Brexit]. But for a business like ours — we’re looking at some Asian markets at the moment — it’s just not impacted at all. A good business with a good revenue model is always attractive to investors whether you’re in the EU or not." Page says in the emailed statement: "WeSwap is continually striving to bring transparency and value to the travel money market through our swapping platform — this will continue no matter the status of EU membership." Jesner did say that the Brexit decision had led to a greater focus on profitability, with fears in the fintech scene that investment could dry up in the short term. He says: "They are expensive businesses to run, fintech businesses. Revenue models are important. "The metrics that we are really focused on at the moment are profitability. We’re really looking to build a hugely profitable business that can be sustainable over time and that can really contribute to the British economy as well." WeSwap isn't profitable today but is aiming to be by next year, Jesner says. Founded in 2013, WeSwap's platform lets people exchange money directly with other travellers looking to buy the corresponding currency. It supports 18 currencies and lets people from 10 countries exchange money over its platform. The startup also provides a prepaid card linked to its app that allows people to then spend their travel money abroad. However, Jesner says only the "large minority" of travel money is sourced through this peer-to-peer model because often the exchanges are lopsided: a lot more people want to trade peso for dollars than want to opposite trade, for example. When this is the case, WeSwap has to buy currency from banks and other providers. Jesner says: "Sourcing currency from people is a far better business model than sourcing currency from banks. When we have to go into the market and buy from banks and sell to customers, that costs us a lot more than when customers bring us currency directly to sell to other customers. "From the user perspective, they pay the same amount whether they’re swapping with a person or a business. We take on that cost, we just make less money." WeSwap takes a 1% cut of exchanges, but this is typically much lower than the rates charged by foreign exchange brokers. Jesner worked as a currency trader at JP Morgan and Dresdner Kleinwort prior to setting the business up. Jesner says: "Today what helps us charge less [than traditional FX brokers] is we have lower overheads. We don’t have branch networks, we’re not in airports, and big infrastructure that’s for sure. "But certainly, when it comes to WeSwap at scale, when we become a larger, more global player, then we’ll start to really see the benefits of the swapping because that’s when we start to see the incremental savings be very significant." Jesner won't disclose user figures or transaction volumes, saying only that "thousands of users swap millions of pounds each month." He also won't talk valuation, but says: "Valuations can be anything, it’s really the deal structure that matters. Often you get these huge valuations because of preference shares and things. It’s kind of meaningless." Revolut's funding deal highlights the fact that WeSwap is operating in a crowded model. Travelex recently brought out a zero fees travel money card and there are many other rival travel money products. Discussing Revlout specifically, Jesner says: "I’m not 100% sure where they’re at. They don’t quite have a revenue model yet. I think they’re really exciting, I don’t know where they’ll end up, I don’t know if it’ll be travel money, their product is broader than that." He adds: "For us, we’re really focused on the swapping piece. It's our job to build a community." The money WeSwap raised will go towards developing new products and expanding to new markets. Jesner says he is looking at Asia and India as potential locations for expansion. He says: "It [Brexit] helped us to think is lets look beyond the EU." WeSwap ran into trouble with its tube advertising campaign last year, which was branded sexist for suggesting men would want to swap their wives for a Swedish model or French maid.
London-based WeSwap has raised £6.5m to expand its P2P travel money platform into new markets and develop new products. Similar to peer Revolut, which as we reported yesterday, has just raised a near identical amount of cash, WeSwap provides customers with a card linked to its app for use abroad. Unlike Revolut, which aims to keep its service mostly fee free to customers, WeSwap charges 1% of the amount of currency converted and aims to be profitable by next year.