Veem: Bringing International Banking to the Modern World

Hi everyone!

This week I’ll be giving my presentation on Veem, a business-to-business platform for exchanging money internationally. While I plan to go much more in-depth on Wednesday, I thought that this blog post would serve as a nice supplement for information. As I hope that you’ll see both here and in class, Veem is a rapidly growing company with a lot to be excited about.

The Basics

come-clean

Veem was founded in April 2014 by Marwan Forzley and Aldo Carrascoso, with the former now serving as CEO. However, it originally existed as Align Commerce until March 2017, at which point they rebranded to the current name. This was done with the intention of sounding more clean and appealing to users. They also wanted something that could be used as a verb: if a business wants to send money around the world, they can now “just Veem it” whenever they want. (Doesn’t that have a nice ring to it!)

The company is currently headquartered in San Francisco and has about 75 employees. They raised a seed round of $1.5 million in April 2015, followed by a Series A round of $17.5 million in November of the same year. Finally, they closed their Series B round of $24.5 million in March 2017, all for a total of about $43.5 million in funding.

In terms of the product, Veem’s platform operates through membership, where each business signs up with its various details and banking information. Users can then transfer capital wherever they want, and without having to worry about different currency rates. All foreign exchange processes are handled in the background, and because financial information is already logged, businesses can simply interact with usernames or email addresses.

Screen Shot 2018-02-12 at 12.24.50 AM.pngScreen Shot 2018-02-12 at 12.23.55 AM.png

So it’s Venmo for international businesses?

Well… Sort of.

The underlying concept of quick and easy monetary exchanges is the same. Aside from that, though, the two entities are pretty different.

First, Veem uses a unique “multi-rail” technology that allows it to find the fastest route for moving money. I’ll go more into this during the presentation, but the main result of that is their use of blockchain as a link between two bank accounts. Whether it’s Venmo or other competitors like Zelle and PayPal, no one else can do this at the same level of efficiency or expertise.

Along with that, Veem does not charge fees to either the sender or recipient in a transaction. Instead, they take a 1.5-2% spread on the given exchange rate and make money through the difference in currency values. Such an approach vastly differs from that of Venmo and other competitors, who charge their users with credit card and merchant fees. This makes Veem’s business model much more attractive and cost-efficient for its members.

giphy

Lastly, the two focus on entirely different demographics: in the context of age, Veem skews towards older populations and those who solely need to get work done. On the other hand, Venmo favors younger people and those who use it more loosely (as we see in their social media element). Moreover, Veem primarily works with small and medium-sized businesses, whereas Venmo almost completely revolves around individuals. I’d like to expand a little bit more on this last point, since I won’t have much time to do so in the presentation.

Bringing SMBs up to Speed

If you’re an enormous business, you likely already have a well-established network for moving money between countries. On the other end of the spectrum, if you’re a tiny shop or startup, you probably never need to make international payments anyway. But what about everyone else in the middle? How do they go about crossing borders with their capital? As it turns out, financial wiring for small to medium-sized businesses is both shockingly outdated and painfully slow.

When a company wants to transfer money overseas, what normally happens is that it moves through a series of intermediary banks. I plan to explore this more on Wednesday as well, but they essentially exist to secure and transfer the funds in different ways (whether it’s between countries, currencies, or regulations). Yet, not only is this process extremely inefficient, but each of these intermediaries also has its own fees for providing service. These can quickly add up and prove very costly for the parties involved. By the time the transaction is over, then, most SMBs end up feeling like these chameleons with Santa hats.

giphy1

Internally, this discourages the business from growing and limits their revenue. They feel deterred from going into new territory and often start to specialize in their respective country. Externally, this also hurts globalization and the sharing of ideas. The overwhelming majority of companies fall in this category, each with their own nuances and innovations, and the rest of us begin to lose out when we no longer have access to them.

With this said, Veem largely exists as a means of disrupting such an antiquated industry: it offers a clear solution to any business plagued by slow and expensive wiring. In turn, its overarching mission is to provide a more financially connected world. While they appear to have expressed an interest in expanding to large corporations and individuals, it is for these reasons that they direct their efforts towards the SMB range.

Field Study Questions

Finally, I’ve included some potential questions to ask the company on our trip (assuming that we go). These could be useful for anyone looking to learn even more about Veem:

  1. The multi-rail technology is one of your largest differentiators in this industry. Aside from the three that you currently use, though, are there any new or innovative rails for transferring money that you’re looking to incorporate?
  2. Last year, your company closed a $24 million Series B round from venture funding. How exactly have you used that funding since then, and how have your investors helped along the way?
  3. Veem used to be known as Align Commerce until it changed to the current name in March 2017. However, it sounds somewhat similar to Venmo and extremely similar to the software company Veeam. With that said, do you foresee another name change coming in the future?
  4. Gaining exposure and usage among businesses can be much harder than with individuals. Correspondingly, how do you market Veem and build momentum for yourself?
  5. As you continue to grow, do you see in-application advertising as another revenue stream for your company? If so, how do you plan to implement it?

I hope you’ve now gained a little more insight on this platform and the world of international exchanges. The future certainly looks bright for this young company, and who knows – maybe one day you’ll decide to “just Veem” your money too.

Thanks for reading!

9 thoughts on “Veem: Bringing International Banking to the Modern World

  1. Veem sounds like a really interesting company! Their business model to not charge fees and instead profit on the difference of currency values will definitely bring in new customers. It will be interesting to see if they will change that in the future. I’m also very excited to learn more about their multi-rail technology. The recent blog posts on blockchain technology have made the technology very intriguing to me, so I can’t wait to get an in-depth analysis at how a specific company leverages the technology.

    Looking forward to your presentation on Wednesday!

    Liked by 2 people

  2. Mike, awesome & informative post! Your questions at the end are very insightful and show your deep understanding of Veem. I am especially interested in hearing answers to your questions about venture funding (2), name choice and change (3), and marketing strategy (4). A company’s name can be very powerful for marketing and it is interesting that you noted the similarity between Veem and Venmo!

    Liked by 1 person

  3. Love this post. Really liked how you compared it and contrasted it with Venmo, something we are all somewhat familiar with. I agree with Lizzy, I would be interested to see what they are doing with the capital they have raised. The amount of businesses that are built on bringing the services usually reserved for only the largest firms to small to mid sized companies is booming (mostly because of the cloud) and it will be interesting to see how Veem expands in the future! Looking forward to hearing more in your presentation!

    Liked by 1 person

  4. Hey Mike! Really thorough introduction to Veem! I just wrote a blog post about FinTech, and this is certainly another company that would fall into this category. I think that in terms of demographics, Veem knows who their target market is and it is valuable that they are not offering the same product as Venmo or PayPal. I think the name of Veem is much clearer than Align Commerce and that that will stick, although anything is posslble. Can’t wait to learn more tomorrow!

    Liked by 1 person

  5. Interesting post, Mike! I’ve only heard of Veem before, so I learned a lot from this. I think it’s really interesting that they make their profit solely through the exchange rate and difference in currencies. I wonder if they plan on maintaining this business model in the long run or if they will diversify strategies. Also, great questions! I had the same one about their business name and its similarity to Venmo.

    Liked by 1 person

  6. Mike, thorough post! I agree with Clare, and I think a huge strategic advantage to Veem is that they make money on the differences in currencies rather than charging a fee. Fees can be extremely annoying for consumers and SMBs: there are fees everywhere! I’m pretty shocked that medium-sized businesses wouldn’t have these international exchange capacities already established in their infrastructure if they have plans to expand beyond their original borders. I’m also interested to hear if you think that Veem can innovate to develop services to serve large businesses as well – this could be a huge factor for Veem’s potential growth. Looking forward to hearing more today!

    Liked by 1 person

  7. Great job, Mike! When I heard about what Veem does, I immediately thought how wonderful it will be if it can also help international students. According to WSJ, international students contributed more than $30 billion to the U.S. economy in the 2014-2015 academic year, a big chunk of it is tuition and housing. I imagine there is a similarly big number for UK, Canada and other hot destinations for study abroad. My family has to go through a tedious process every year to wire tuition to BC and fees are very annoying. It might be a stretch right now but I am interested to see if Veem is going to tap into other international money exchange services in the future!

    Liked by 1 person

  8. This is a clear and concise introduction to Veem, Mike. As an avid Venmo user, the comparisons you drew allowed me to understand Veem’s mission much more easily. On our trip, it will be a great experience to pick the brain of the CEO, Marwan Forzley. I am curious about the challenges Veem faced as they scaled (and continue to scale) and how they pivoted accordingly. Taking this class has made me become even more interested in FinTech. That being said, I am really looking forward to this visit.

    P.S. Great use of GIFs!

    Liked by 1 person

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s