Wise .. a payment company that has its eye on the market for border transfers

The co-founder and CEO of the financial payments app Wise tried to give a positive twist when the group finally announced its first results as a public company.
“We are now moving 3.5 per cent of all personal money sent across the border. We are really happy to be in this position – but we still have 96.5 per cent of the money to get there,” said Christo Karman told shareholders.
But the Estonian entrepreneur’s efforts were not only undermined by the jump in costs that profit growth for WISE, valued at £ 9 billion when it was launched in London 12 months ago, was hampered in an unusual blow to the British market do not have. Just a day before its first results were announced, WISE, formerly known as TransferWise, revealed that the UK Financial Conduct Authority had launched an investigation into Karman for his intentional tax default.
The Financial Conduct Authority has launched an investigation – which comes after Karman was fined by HM Revenue and Customs – for placing the entrepreneur as an “approved person” who must be regarded by the regulator as “suitable and appropriate” for his job to do.
“This is disappointing news,” said Ross Shaw, founder of Tech London Advocates, a network of technology entrepreneurs. “It is undeniable that this will put additional pressure on the founders and the WISE board to ensure that the matter is handled responsibly and in an appropriate time frame.” “.
This confrontation with the regulator is the culmination of a painful first year for WISE as a public company, which Karman co-founded in 2010 with his friend Tafeet Hericus, who served as president until last year, while the duo formed a opportunity to turn around. the overpayment business they dominate Banks with their high fees for a long time.
Karman, 41, said he was inspired to start the company after being shocked by the exorbitant cost of transferring money to Estonia from London, when he moved to the British capital in 2007 to work for Deloitte, an audit firm. and consulting firm, one of the four major firms in the field. WISE set its ultimate goal of making cross-border money transfers free and called it Mission Zero.
“Why would a reasonable person risk his hard-earned money so that the bankers invest it in loans for their own profit, without the depositor getting a return,” Karman said in 2015 when Wise’s ambitions attracted investors, including Index Ventures. Silicon Valley Bank, and Billy Gifford.
“If you look at the way they set up the business and set themselves up, they say very strongly, ‘We stand with consumers,'” said Dom Halas, CEO of Codec, a trading body representing UK start-ups. , said.
But despite the company’s profit since 2017, its shares have fallen nearly 70 percent since listing, while the FTSE has changed 100 min over the same period.
Analysts say WISE, like most fintech companies, was dragged down by hard sales when rising interest rates forced investors to abandon the high-growth companies sought after over the past decade.
WISE saw a sharp rise in costs – 48 per cent to 321.4 million pounds – rather than its forecast that revenue would grow between 30 per cent and 35 per cent this year. In the 12 months to March 31, revenue rose 33 percent to 559.9 million pounds, and profit before tax grew 7 percent to 43.9 million pounds.
With Karman facing the challenge of winning investors, current and former employees of the company – which has about 3,400 employees – say his approach is unlikely to change.
“He is a very humble man,” said a former employee. “If you did not know he was the CEO, you would not have known it in any way.” He added: “He worked with all of us at the same table.”
Karman’s interests in extreme sports range from adventure racing to snowboarding, and he has an annual ritual where he rides motorcycles across Africa with his brother. He was applauded for his decision to list WISE on the London Stock Exchange instead of in New York.
“The fintech sector is a key sector for the city, and the UK as a whole, and it’s critical that early-stage founders see a clear path out of this,” said Oliver Richards, partner at venture capital fund MMC Ventures in London. . He added, “WISE’s decision to list here was a wonderful embodiment of the company’s confidence in London.”
However, the FCA investigation soured the festive atmosphere at the company. Following the HM Revenue and Customs fine, Wise herself completed an investigation with legal counsel at the end of last year, before sending her findings to the regulator.
David Wells, WISE’s president, said the board took Karman’s tax neglect and FCA investigation “seriously”, but the board would continue to support him as the company’s CEO.

Leave a Comment