TransferWise’s Perspective on Brexit

Taavet Hinrikus, co-founder of TransferWise Ltd., recently sparked some conversations within the fintech realm. He suggested that if he were to kickstart TransferWise in today’s environment, London wouldn’t be his top pick. Is it time for London to start sweating a bit? Perhaps, as firms like TransferWise assess the ongoing fallout from Brexit.

Understanding Passporting Rights

Founded in 2010, TransferWise has been shifting money across borders since its operations kicked off in 2011. With over a million users daily sending around £1 billion each month through its platform, the stakes are high. The company firmly believes that their services save users a staggering £1.5 million a day compared to using conventional providers. But what about those precious passporting rights?

TransferWise commented, “If the UK loses passporting rights as a result of Brexit, then in order to serve our customers, we will need to get licensed in another European country and this means we would set up an office there.” This means that even though London remains their global HQ, they’re not exactly putting all their eggs in the British basket.

Uncertainty Reigns Supreme

When it comes to predicting the effect of Brexit on the broader money transfer business, TransferWise is as stumped as the rest of us. A spokesperson mentioned, “Two of the main benefits of being a part of Europe for a Fintech business are passporting but more importantly the free movement of talent.” And let’s be honest: losing the ability to recruit top talent across a continent sounds about as fun as a root canal.

The Unicorn Splash

Despite Brexit-related concerns, reports from GP Bullhound highlight that TransferWise stands as one of Europe’s foremost unicorns. The UK boasts the largest share at 18 such businesses, all collectively valued at a jaw-dropping $39.6 billion. But, can the unicorns maintain their sparkle amidst Brexit’s dark clouds? That’s the million-pound question.

Trends in Tech Deals

2016 saw British tech deals soar to unprecedented heights, with GP Bullhound noting that even through crises, innovation prevails. However, the story shifts when looking at deal numbers pre- and post-referendum. Before the Brexit hullabaloo, tech transactions counted a robust 2,426; post-referendum? Only 1,583. Ouch. Are tech firms hitting the brakes, or just taking a moment to recalibrate?

Conclusion

While it remains too early to paint a comprehensive picture of Brexit’s impact on the fintech sector, TransferWise appears to be strategic and cautious. The illustrious days of carefree monetary transactions and talent mobility may soon meet some roadblocks, but it seems this unicorn is keeping its head above water for now.