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A fintech innovator overfunds equity crowdfunding round in eight hours




By Lisa Walls-Hester on 31st October 2016


WeSwap, the fintech platform that allows people to swap currency, managed to pull off a noteworthy pre-registration campaign, overfunding its £1m target by over £500,000 with backing from 1,086 investors before its full public launch.

 

WeSwap claims to be the world’s first platform that allows travellers to skip the banks and bureaus and simply swap currency with each other at the interbank rate.

 

It undercuts traditional banks and money exchange intermediaries because it charges just one per cent. The platform claims it has saved its 200,000+ customers over £1.2m in exchange fees since its public launch in 2015.

 

Source: WeSwap

 

The company’s target raise was £1m and it raised £1.5m before the pitch even opened to the public. At the time of writing, the pitch is overfunded by 194 per cent with over £1.9m of funds.

 

WeSwap wants the new capital to support its rapid growth, the platform claims to have members in 10 countries and swaps in 18 currencies. It has experienced growth of over 200 per cent in the last year, growing trading volumes an average 24 per cent month on month between January and August 2016.

 

Its focus for 2017 is expansion into new and existing markets and product development.

 

This latest crowd raise follows an earlier round in July 2016, of £6.5m, which was led by investment firm Ascot Capital Partners and backed by existing investors EC1 Capital and IW Capital. Since its development trials in 2013 the company has raised over £10m.

 

But with no shortage of institutional backers, why did WeSwap bother with a crowdfunding round? The company says WeSwap is the people's currency exchange, helping travellers around the world get a better deal on their travel money and wants its users to own the company.

 

Jared Jesner, Founder of WeSwap, says: “We’ve had an amazing year at WeSwap and we’re very excited to be inviting our travellers to become an even greater part of our future as part-owners of the business. We’ve built the technology, but without travellers swapping currency there is no WeSwap. So we want to invite our community to help us develop and grow the platform, and have the opportunity to share in the success they too helped to create.”

 

The proposition for investors

 

With such a large existing customer base, it's no real surprise the campaign funded quickly. It has a considerable audience for direct marketing but in addition to the investment proposition, the company offered backers attractive perks such as zero transaction fees on its platform.

 

Investors have not been put off by the platforms hefty valuation. The company is offering shares at £5.40, based on a pre-money valuation of over £24m. Of its valuation, the company says: “Our valuation is based on progress to date, future potential and the price that VC investors are willing to pay for the shares.”

 

 

It points to its 200,000 user base and rapidly growing revenues, adding: “Progress has been impressive and the potential is huge. Our valuation has steadily increased in line with business progress. An acquisition offer in 2014 set the series A valuation at £15m. Investment in 2016 of £2.4m by Ascot Capital was made at the £24m valuation. This reflects Ascot’s belief that an excellent return can be made on their investment at this level of valuation.”

 

Other high profile investors seem to agree. Tennis ace and world number two Andy Murray has backed the company with an undisclosed amount. He said: “WeSwap was interesting to me because I travel so much around the world – I thought this was a really clever idea and could immediately see the gap in the market for this business to work”.

 

The exit strategy

 

The company has already received an offer to purchase the business from a major travel money business and believes other buyers will emerge in the short-term but intends to focus on increasing its membership and revenues prior to any sale and expects an exit between 3-5 years.

 

The company also sees potential in the business traveller market and wants to roll out new products in this sector. Like all marketplaces, WeSwap will collect and own large amounts of membership data such as customer travel and spending patterns and the company intends to leverage this asset in the longer term.

 

WeSwap has already agreed distribution deals with Hotels.com, National Geographic, Skyscanner and Cheapflights and is forecasting revenue of almost £45m by 2019.

 

It is not ruling out needing further financing rounds and says it may seek additional external investment in the coming months. It also has a debt facility of up to £1.6m, which has already been agreed with one of the Company's existing shareholders.

 

There is an immense public appetite for fintech firms at the moment and crowdfunding campaigns for alternative finance platforms are keenly backed. Is this due to their transparency, democratisation and low-cost products, or the fact that we are all so deeply disillusioned with traditional providers that we are eager and willing to back any and all alternatives that come along?

 

A recent survey by early stage venture capital firm Blumberg Capital reveals how much consumers love fintech. It reports three in five Americans have a positive view of fintech and 57 per cent of respondents believe traditional banks will cease to exist within their lifetime. This latest raise shows that consumers can’t back fintech fast enough. 

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