Silicon Valley billionaire Peter Thiel is doubling down on a German fintech startup

Peter Thiel, the billionaire cofounder of PayPal and first outside investor in Facebook, has increased his investment in German fintech startup Deposit Solutions.

Thiel invested €1 million (£840,000, $1.1 million) into the Hamburg-based business in January as part of a €6.5 million (£5.4 million, $7.1 million) funding round.

Today he and existing investor FinnLab are both increasing their holdings, as part of a €15 million (£12.5 million, $16.5 million) investment round. US VC firm Greycroft Partners and also took part in the round, which values Deposit Solutions at €110 million (£91.9 million, $121 million).

Deposit Solutions, founded in 2011, provides a platform that lets people access the best rates from multiple banks without having to open up new accounts with each lender.

Imagine bank A, which offers a 2% savings account, has money sitting on its balance sheet that it doesn’t need right now. Bank B, meanwhile, offers a 5% savings account but needs more money. Deposit Solutions platform lets Bank A say to its customers, hey, we’ll give you Bank B’s 5% rate on our account. Bank A then lends Bank B the money it needs behind the scenes and Bank B agrees to make good on the 5% interest in exchange for the funds.

It’s win, win, win: for the customer, you get Bank B’s juicy 5% rate without the hassle of opening another account; for Bank A, they get a happy customer who, hopefully, is less likely to leave; and for Bank B they get access to capital.

Max von Bismarck, Chief Business Officer and Managing Director of Deposit Solutions, says in an emailed statement:

“We address an important structural problem in European banking today for banks and retail customers: Many banks are unable to offer attractive interest rates to their clients. At the same time, other banks find it difficult and costly to gain access to retail deposit funding. Our platform provides a solution for both while savers find it easier to get access to better rates.”

Deutsche Bank recently signed on to use the platform and Deposit Solutions’ consumer offering ZINSPILOT is handling €100 million (£83.6 million, $110 million) of retail deposits each month.

Deposit Solutions plans to use the extra cash it has raised to continue expansion into the UK and Switzerland. The startup recently opened a London office and plans to launch its platform in the UK by 2017.

Deposit SolutionsDr. Tim Sievers, CEO and Founder of Deposit Solutions

Dr. Tim Sievers, CEO and Founder of Deposit Solutions, says in an emailed statement:

“We are seeing substantial demand from banks looking to offer their clients attractive deposit products under the existing account relationship. As a result we have gained access to millions of clients and billions of deposit appetite in a very short amount of time. This in turn is very attractive to banks wanting to raise deposits through our platform.”

Peter Thiel, who has been in the news recently for funding Hulk Hogan’s lawsuit against Gawker, has backed several European fintech startups. Thiel’s Valar Ventures fund has invested in German start-up app-only bank Number26, Hamburg-based credit checking company Kreditech, and UK international money transfer service TransferWise.

NOW WATCH: 3 Wall Street legends share one investment they find attractive right now

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.