Index Ventures may have been one of Wise's earliest investors, but it won't win big in the fintech's planned public floatation.
Indeed, the famed venture fund has already cashed in 99.63% of its stake in Wise (formerly Transferwise), participating in secondary deals across 2017 and 2019.
According to public filings analysed by Sifted and Beauhurst*, Index has sold up to €66.8m in Wise shares, transferring most of its stake in 2019 when the startup was valued at €2.9bn.
Index first bought into Wise in its seed round in 2012, and then followed on repeatedly up to its Series C. Prior to cashing out, Index owned 2.88% of Wise, having been an early (but heavily diluted) investor in the company.
Index has still clearly made a killing in Wise, a startup which has transformed cross-border payments. Indeed, we estimate the fund secured a return multiple of between 19x to 27x on the working assumption it invested around €2.5m to €3.5m overall.
Still, if Index had waited to sell at Wise’s expected listing price of €5.5bn+, the fund could have been looking at a €145.7m cheque: a whopping additional gain of €78.9m, more than 2x what they actually banked.
Index now holds just 0.01% of the company. If the listing goes as planned, that should see it bank €550k on 'IPO' day, if it chooses to liquidate immediately.
Wise and Index both declined to comment.
The secondary charm
Index is not the first seed investor to have cashed in ahead of Wise's planned listing.
Seedcamp, another early backer of Wise, also sold part of its stake in late 2016. But unlike Index, Seedcamp hung on to the majority of its shares in Wise, which it will be able to liquidate at the listing price if it wishes. At the time, Seedcamp told TechCrunch that the decision to sell only part of its stake was part of its strategy to strike a “win-win balance” for investors.
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Equally, Wise's cofounders also cashed in a tiny percentage of their holdings in the secondary sales. According to filings, cofounder Taavet Hinrikus raked in €66m in the 2019 sale, using the company's then-valuation. That still left him with 13% ownership of the company.
Index's decision to liquidate its entire stake in Wise prematurely may now seem a missed opportunity.
But it's worth noting that it invested in Wise from its fifth early stage venture fund, which raised funds back in 2009. The decision to sell the Wise stake was hence likely driven by the shares' maturity and age, and an impulse to safely bank investors' returns a decade later.
A full analysis of who Wise's biggest stakeholders are, and who will win big when it lists, is coming soon...
* Note that secondary sales usually happen at a 15-20% discount. However, insiders at Index confirmed that was not the case here. For reference, Sifted utilised Beauhurst data and Companies House filings to come to the figures presented throughout.
Isabel Woodford is Sifted’s fintech correspondent. She tweets from @i_woodford and coauthors our new fintech-focused newsletter. Sign up here.
Bill Leaver is Sifted’s analyst. He tweets erratically from @billeaver4