Currency Cloud Using Funding To Fuel US Expansion

Facilitating the transfer of money often results in a great deal of misconceptions and issues for both consumers and businesses. But Mike Laven, CEO of Currency Cloud, a B2B cross-border money transferring service, sat down with PYMNTS to discuss how the company’s latest funding will help it to address these concerns, especially as it embarks on the U.S. market.

Currency Cloud recently landed an $18 million round of Series C funding, how did you get that funding and how are you planning to use the money?

ML: As a B2B enterprise in the money transfer space, we thought long and hard about the kinds of companies we wanted to have behind us and who we wanted to raise funds from. There are two principal investors in the new round, Sapphire Ventures and Japanese eCommerce leader Rakuten (through its FinTech Fund), in addition to our existing investors. I talked to a number of possible investors for the company but remained very clear about what we wanted in terms of investors. As a global company, we sought out global investors and wanted people who are also interested in the enterprise nature of what we do.

There are a series of other firms in the peer-to-peer and consumer space, some of which are our customers, who we have seen get a large amount of money raised. But the value proposition of Currency Cloud are B2B and enterprise, which is quite different from consumer and it was important to have investors who understood the enterprise space and are also global in nature.

In terms of what we want to do with the funds, we are certainly still building out our basic service. There are a lot of components and things that want to do beyond that but essentially the funds will go to our expansion globally. The first step in that will be the U.S. We just established five people in New York and are in the process of completing all of the regulation and compliance approvals that need to be in place. Following that, in 2016, we will begin planning for an expansion into Asia as well, by building up our clientele in the Asia market. But in the next 12 to 18 months, the funding will go primarily to building out our platform and delivering services to U.S. customers.

You mentioned Sapphire and Rakuten were strategic investors in this round. What about Currency Cloud’s platform drove these organizations to invest in the company?

ML: If you look at the global money transfer market, there is a lot of attention on the P2P or consumer space. Just recently, PayPal acquired Xoom, which is a well-known company servicing P2P money transfers. But the B2B money transfer space is actually 10 times larger than the consumer space. Although, the companies working in global money transfer, remittance, and personal transfers for both consumers and businesses face the same issues. These issues include transfers costing too much, being difficult to process and prices not being transparent — but our focus remains on the business space. Our singular focus on business-to-business is something that appealed to a series of investors who were interested in participating in the cross-border environment.

Another aspect Currency Cloud investors favored is that we are a part of the API economy. Customers can access our service through a single API connection, which then connects the customer to a global banking environment. In terms of FinTech, this puts Currency Cloud in the next generation of finance and banking.

Being active in the B2B environment, where there are fewer companies compared to the consumer side, and our technology being cloud-based API economy equipped are both factors that were attractive to our investors.

Last year, Currency Cloud opened an office in New York. As a U.K.-based company, what has been your experience in the U.S. so far and what are your future plans for this market?

ML: The U.S. market is very big compared to Europe, especially in terms of the absolute dollar value of cross-border business. But the actual percentage of international trade as a part of the total economy in the U.S. is actually about a third of that of Europe. Though the U.S. is larger, the percentage is much smaller in comparison. In general, U.S. banks have provided roughly 85 percent of the cross-border business transfers in the U.S., so we have accumulated a whole set of customers who are very interested in the service as we continue to get it set up.

Due to so many of the transfers being facilitated by banks, we have seen that many of the issues, such as pricing, transparency and fees of use, are very present, which results in a tremendous need for the services Currency Cloud provides.

When it comes to moving money internationally, what are the Top 3 misconceptions in the industry today and how would you go about correcting them?

ML: The most important thing I find from a business customers’ perspective is a lack of transparency. Often with customers we are dealing with [them being] completely unaware of what they are paying because they make a transfer through a bank at the beginning of the month but they do not know the actual price until they receive a bank statement at the end of the month. For businesses, this is really not acceptable. But I wouldn’t call this a misconception so much as just a bad user experience.

Another misconception is that money transfers have to be difficult. If you have any experience with attempting to feed funds to the U.S. from Europe or paying from the U.S. out, you know it can be difficult. Going through the process of all the paperwork and hoops you must jump through can be a real pain.

Lastly, many business customers believe making international money transfers is always very expensive. None of those things have to be true. It can be simple, it can be cheap and customers can know what they will be paying for the service. All of this is available, but it takes more than just our services to make it happen, it also requires greater consumer consciousness and the application of technology.

What is next for Currency Cloud? What innovative projects do you have in the works that you can disclose with us?

ML: The most important project right now is getting our services up and running in the U.S. Currency Cloud is not just a software or technology company, we handle the money of businesses which is regulated by all 50 states within the U.S. market. Since handling any business or consumer funds in the U.S. is a state-regulated activity, we have 50 states within which everything must be done in order to provide our service nationwide. By offering our services online, we must ensure that when a customer signed up we are authorized to service them no matter what state they are located in.

We are heavily involved in all of the things needed to offer our services to customers throughout the U.S. The most important thing we are currently involved in is getting all the compliance and regulatory infrastructure in place to actually service that market. It may not sound exciting, but in our business that is what we need to do.

All of the complexities, such as addressing the regulations in each state and establishing banking relationships, are what we must ensure is built into our system if we want our service to be easy to use and transparent to customers. This is what we are devoting all of our energy to right now.