Safello raises $600K to broaden bitcoin participation to the masses
A Q&A with Safello founder and CEO Frank Schuil. The Stockholm-based bitcoin exchange that is built to appeal to a broad audience, last week announced the closing of a $600,000 Seed funding round. Investors include Erik Voorhees, Roger Ver, Nicolas Cary and Victor & Victor. It was founded last summer by Schuil and Emil Oldenburg.
SUB: Please describe Safello and your primary innovation.
Schuil: Safello was founded in July, 2013, to kick off the next generation of bitcoin/cryptocurrency exchanges that are fully compliant and appeal to a broader audience than just the technorati. Based in Stockholm, Sweden, we started our journey to transform the way people look at and use money.
SUB: Who are your target markets and users?
Schuil: Initially, our target market was Sweden, and we quickly grew into the market leader. Now we closed a round of funding to expand to a broader European audience, with global ambition as our end game. The typical Safello user is someone who wants to get into bitcoin, but doesn’t know where to start. On our blog we educate you on bitcoin and we try to keep our interface as simple as possible to reduce the friction that exists in the market today.
Schuil: An obvious competitor is Coinbase, the U.S.-based bitcoin company that has been growing rapidly. We do something similar in Europe, but we believe our interface wins. If anything, we want to differentiate ourselves by creating an elegant user experience for both the hardcore bitcoin users and the newbies.
SUB: You just announced that you’ve raised $600,000 in Seed funding. Why was this a particularly good time to raise outside funding?
Schuil: The bitcoin market is rapidly growing, hence to gain market share funding was a logical step to take. Our timing was spot on with last year’s meteoric rise to $1,200 that certainly helped us close our round at the terms we had in mind.
SUB: How do you plan to use the funds?
Schuil: We already had our action plan in place to execute the next phase with this money. Predominantly, we wanted to grow our team to the eight people we have today. There are also added costs to adhere to the compliance requirements, and we are trialing in different geographical markets to test the waters.
SUB: What was the inspiration behind the idea for Safello? Was there an ‘aha’ moment, or was the idea more gradual in developing?
Schuil: This differs per founder. My co-founders were already working in bitcoin, while I was just exploring the market. Once our interests aligned, we travelled to the bitcoin conference in London to get a feel for the state of the market and understand whether our plan had any merit. We concluded then-and-there to proceed and build Safello.
Schuil: This is not my first startup, so this part for me was pretty much business as usual. One thing that was different is the difficulty we had getting bank accounts and the financial registration with the authorities. We were about done with our platform and still weren’t approved by a bank, nor the financial inspection in Sweden. In the end, we pulled it off just in time for the launch.
SUB: How did you come up with the name? What is the story or meaning behind it?
Schuil: There was some brainstorming involved in this one. We had a good idea of what our company stood for, but the search for a domain name was tough. In the end, we came up with Safello, that was a combination of ‘safe’ and ‘fellow’—in other words we are your safe way into bitcoin. Immediately it dawned on us that we could use this in our communication and it embodies everything we stand for; and the fact that the domain name was available didn’t hurt.
SUB: Do you have plans to seek additional outside funding in the near future?
Schuil: As bitcoin is a hot topic and Stockholm is one of the best geographies in the world to start a company like ours, we have ongoing dialogues. Above all, we want to find the partner that can give us the strategic leverage to enter the global stage when we decide to do so.
SUB: What have the most significant challenges been so far to building the company?
Schuil: Inherently, every bitcoin company struggles to get the traditional financial world onboard, with the exception of non-fiat converting companies like Blockchain.info or LocalBitcoins.com. It’s a slow and political process, but we are making headway and have already reached some of our milestones.
SUB: How do you generate revenue or plan to generate revenue?
Schuil: Right now, we operate with a spread model that gives us a percentage cut on every trade when bitcoins are converted to fiat, and vice versa. Long term, we believe this model will be redundant or marginalized, and we certainly have plans to execute other business models down the line.
SUB: What are your goals for Safello over the next year or so?
Schuil: Bitcoin years are like dog years—a lot can happen and a lot will happen. Within six months of inception we raised our round and became [the] market leader in Sweden. If we can follow that trend with our European expansion plans, I’d be very happy. Beyond that, I guess readers will just have to sign up and see what comes next for Safello.