Little more than a week after announcing a partnership with foreign exchange service Transferwise, London financial startup The Currency Cloud has landed a £2 million ($ 3.1 million) round of funding to help it go global.
The money comes from Notion, a new venture firm started by MessageLabs founders Jos White and Stephen Chandler that announced a $ 100 million fund for European cloud startups in April. It’s the fund’s first investment — and one that White seems particularly proud of.
“We said we were going to invest in the best European startups in the cloud, SaaS, business-to-business area — and The Currency Cloud meets a lot of the criteria we’re looking for,” he told me. “It’s a market dominated by banks, but when you peel back the layers you realize there’s a lot of customer pain and frustration.”
What he means is that The Currency Cloud helps relieve some of the anguish that businesses feel when they’re transporting money across borders and between currencies. Right now it’s a service that banks exert an enormous amount of control over, and one that they extract a vast amount of profit from. Banks charge up to 4 percent for a currency conversion, but The Currency Cloud’s platform connects to bank accounts in more than 140 currencies and charges businesses far less.
It operates a series of APIs that connect a company’s payroll and accounting straight into banks in their chosen country — potentially bypassing traditional foreign exchange systems and a radical proposition that costs an average of 0.5 percent and 1 percent per transaction.
CEO Michael Laven said that the money — which comes on top of a $ 2.5 million round from Atlas Ventures and Anthemis earlier this year — would help the company expand its offering.
“We need to build out a global platform for our customers,” said Laven. “We’re currently receiving payments in sterling, euros and dollars and paying out in 140 currencies. That has a lot of complexity; there’s a lot of development and operational work… but we want to be able to receive in more currencies.”
Unlike its partner Transferwise, The Currency Cloud is not a consumer-facing service. But it’s already doing strong business, with millions in transactions crossing its platform each day. The average payment is around £70,000 — companies sending their payroll internationally or settling accounts with suppliers, for example.
However, the big question mark appears to be over how far and how fast the business wants to go. While Laven said that he thought the injection of capital would be enough to help the business run until the end of 2013, White said he would be pushing the company to be even more ambitious.
“The current financial model shows this money taking the company to breakeven,” he said, “But we’re pushing them to go further. One of our jobs is to help European companies think bigger and really go global.”
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