An early investor in UK fintech unicorn Transferwise has reduced its stake
An early backer of one of the UK's most successful fintech startups has sold a minority stake in the unicorn-valued firm in a private secondary share trading deal.
Seedcamp, which has also invested in eMoov and BorrowyDoggy, last year sold of some of its shares in Transferwise, the money transfer startup with a valuation of more than $1bn TechCrunch first revealed.
It's the largest secondary exit for Seedcamp to date and it's understood to be returning 80 per cent of its €5.2m (£4.5m) second fund to investors.
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"We want to show that in Europe the secondary, which is the least talked about, is a very viable way to do exactly that. We've returned 80 per cent of a fund that's barely six-years-old and we hold on to the majority of our stake still – and it's perhaps the biggest seed exit in Europe last year," said Seedcamp co-founder Reshma Sohoni.
Andreessen Horowitz, already an investor in Transferwise and one of the world's most high-profile venture capital firms, increased its stake last year, buying up secondary shares from early investors it was revealed last week.
"As more international investors look to the UK we're likely to see more of this," Sohoni told City PM. "The more liquidity the better for early-stage investors."
A trend for highly valued so-called unicorns – private comapnies valued at more than $1bn – to stay private for longer has seen secondary share trading boom in the US.
Read more: Transferwise set for second round of fresh funding
It's estimated that the total value of tradable shares among the top private US companies last year stood at $35bn, up from just $11bn in 2011. The figures from Scenic Advisement, a US investment bank, forecast that to grow to $38bn in 2017.
A secondary offering allows early-stage investors and early employees with stock to cash in on their investment without an IPO or M&A.
Revenue at Transferwise tripled in 2015, the latest figures available, to £28m, while pre-tax losses grew from £17m to £11m the previous year. It said it is putting its efforts into growing the business rather than aiming to become profitable at this point in time, as is typical of many startups.