"Giving early stage businesses large amounts of capital is bad practice.” You probably wouldn’t expect those words to come from the founder of a startup, but they did.
Perhaps it’s Jared Jesner’s honesty that makes him endearing – a quality which has arguably helped him get where he is today.
Jesner is the quietly confident chief executive of WeSwap – a travel money transfer company that is starting to shake up the way we exchange currency. It’s essentially a peer-to-peer service that lets users swap currency with other users.
The concept for WeSwap emerged during Jesner’s time working for oil giant Shell, when he travelled constantly between the head offices in London and the Hague. “I’d see my colleagues at the currency exchange desk in the airport – so I thought: what if we swapped currency with each other without being ripped off?”
While millions of fintech firms are competing to try to disrupt the banking sector, WeSwap has arguably been bolstered by its position in the travel industry, having now formed partnerships with various travel businesses and airlines, such as Skyscanner and Hotels.com, which now distribute the product.
The startup has ploughed through various financing paths in its six-year lifespan. From getting angel investors on board, to smashing its £1m target in an oversubscribed crowdfunding campaign, the firm has now launched a series B funding round through private equity house, IW Capital, in which it hopes to raise £8m.
But when it comes to growing a business, Jesner knows that simply handing over a giant wodge of cash is not the best way to make it a success.
“When you give capital to someone who doesn’t know how best to spend it, it leads to poor behaviour and inefficient spending – it’s just bad for business,” he says, pointing out that it’s the support that comes alongside the cash which is crucial.
Pick the patient investors
Jesner thinks that early stage companies should be picky about choosing venture capitalists (VCs) to back their firm, and he says it’s important to opt for investors who are patient. “It takes time for startups to find their feet, and they need constant support during the early stages.”
He points out that many VCs would drop a firm if it failed to meet its first year plan, which is potentially catastrophic for the company because it could mean no one else will want to invest going forward.
“When you’re right at the beginning and you make a plan, you have no idea if that plan is reasonable or not.” He explains that this is where the IW Capital team has helped, assessing the plan, its progress, and whether more investment is needed.
But it’s also about having simple deal structures in place – which Jesner says is pretty hard to come by in the VC universe. “These complex clauses can lead to problems later on and can mean the founders don’t make as much money as they should, while the VCs might double their money.”
And ultimately it’s crucial that businesses to have the right mix of finance at the right stages. “Getting big VC investors in too early can lead to failure; it’s not good early on, but it’s really helpful later.”
As any entrepreneur will know, starting a business from scratch is not without its challenges, and the born and bred Glaswegian admits that every rung on the ladder has its difficulties.
“In the early stage of WeSwap, I was asking if anyone knew any rich people,” Jesner laughs, adding that getting hold of the first £1.2m was really tough.
“Our headline numbers are successful now, but there’s been a lot of failures in the middle to achieve those. It was never about being clever or creating the best plan, it was focus and determination.”
Jesner admits that the decade he spent living in Israel has had a lasting impression on the way he conducts business, adding: “Israelis are ruthless executors of business strategy.”
His devotion for WeSwap was put to the test a few years ago when someone wanted to buy him out. At the time, Jesner – who has three children – had no money, and was borrowing from his grandmother to pay the bills. “It made no sense at that point to continue with the business, but I pulled out of the deal because I realised it was more about a love for the business than a big cheque.”
Forget the fortune
Jesner’s unrelenting belief in his idea has driven WeSwap forward, and since its full launch two years ago, 320,000 customers have exchanged a total of £100m. It also made more revenue in the first quarter of this year than in the whole of 2015.
Of course many factors come into play when determining the success of a company. But here’s a boss who reinforces the idea that entrepreneurs should focus on building a great business that they believe in, rather than building a businesses for investors.
Money might be the crux of WeSwap, but it’s certainly not everything.