A local tech startup has become profitable in the past year by focusing on the international higher-education market. Now it has raised a sizable venture round to go big in the broader field of digital payments.
Boston-based peerTransfer has closed $22 million in Series C funding, led by new investor Bain Capital Ventures. Previous investors including Spark Capital, Devonshire Investments, and Accel Partners also participated in the round. The money roughly doubles the company’s total funding, which now stands at $43.5 million.
Being profitable is like a “badge of dishonor in the startup world,” jokes Mike Massaro, peerTransfer’s CEO. “We weren’t spending enough money.”
That’s about to change. PeerTransfer started out in 2009 by making software that helped international students make online tuition payments to U.S. colleges, with more favorable fees and exchange rates than they’d get through traditional banks. The company has built up a customer base of some 600 colleges and is adding about 50 a quarter, Massaro says. “What’s really helped us is to focus on schools, and students and their families,” he says.
PeerTransfer’s software plugs into schools’ websites and essentially bundles tuition payments going between two countries to reduce the fees involved. But what the company really has is software for handling large cross-border transactions—and that could be applied to many fields, not just education. Think businesses in real estate, healthcare, or any industry that processes international payments, Massaro says.
The payments sector has seen consolidation in the past year and a half. PayPal acquired payments firm Braintree for $800 million in 2013. Heartland Payment Systems last year paid $375 million to buy TouchNet, which makes payments software for universities. Other big names in the sector are Stripe, Square, and, of course, Apple.
All of that makes it an intriguing time for peerTransfer and its investors. The company has just under 50 people and is looking to add 15 more in the next year, Massaro says.
PeerTransfer was founded by Iker Marcaide, an MIT Sloan School graduate and native of Spain who got stuck with thousands of dollars in fees while paying his tuition from a European bank. After five years—he was peerTransfer’s CEO until the end of 2013—his vision of solving this problem for international students seems much closer to reality. Last year, Marcaide moved on to found Valencia, Spain-based Zubi Labs, where he is advising and investing in “businesses that make the world better,” according to the firm’s website.
