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For emerging market financial services, remittances – people sending money across international borders, often do not The World Bank estimates that US $ 529 billion was spent from and to low-income countries in 2018, up 9 percent from 2017. Today, one of the world's largest startups providing these services, announces that it has raised $ 220 million to deal with this wave.
CEO and founder, Matt Oppenheimer, said in an interview that the start-up would use this money to help it continue to expand its money transfer business and seize new opportunities that come under form new financial services for immigrants and migrants. which constitute the majority of its clientele.
The money comes in the form of stocks and debt, including a $ 135 million Series E run by Generation Investment Management, and $ 85 million in debt from Barclays, Bridge Bank, Goldman Sachs and Silicon Valley Bank. Owl Rock Capital, Princeville Global, Prudential Financial, Schroder & Co Bank AG and Top Tier Capital Partners; and previous investors, DN Capital, Naspers' PayU, and Stripes Group also participated in the equity round.
Oppenheimer said equity will be used both to expand its remittance business but primarily to invest in this new wave of services it monitors. Debt, on the other hand, must fuel the growth of its "express" quick-dispatch option. "Today we can send money, but we can pre-finance express transfers as well. We wanted to have the capacity and the line of credit to finance the pre-financing part, which is growing rapidly, "he said. the debt financing part.
With share in shares, Remitly's a valuation close to $ 1 billion (between $ 950 and $ 1 billion), according to sources close to society. In comparison, Remitly is roughly on a par with World Remit, another major emerging markets remittance player, which raised $ 175 million in June for a valuation of about $ 900 million. . (Transferwise, which focuses on bank accounts and most mature markets, closed earlier this year funding valued at $ 3.5 billion.)
This is the biggest fundraiser ever for the startup, and in some contexts it was valued at $ 230 million in the last release. (Remitly has not revealed any evaluation in its most recent funding before this one, a $ 115-million round led by Naspers that was finally closed in early 2018.)
Today, Remitly's services cover 16 shipping countries and 44 receiving countries, making a total of 700 "corridors" within which the company specializes in providing a simple way – online or by phone – to individuals to send money, with the service located at the recipient to come in formats that are most popular in each specific market.
The company said the average annual growth in its turnover is close to 100% each year for the past three years. Oppenheimer – who by chance ran one of its new sponsors, Barclays – would not determine which markets grew faster than the others, but this figure includes both the more mature Remitly corridors and those recently added . years.
The diversification plan is not surprising. The remittances market is extremely fragmented and, with the rise of smartphones that retail store users are physically independent of, becomes even more so, with incumbent operators such as Western Union. Larger startups such as TransferWise also seem to be increasingly interested in emerging markets, and totally new concepts, such as using the blockchain to transfer money, could also disrupt the disrupters.
This means that the pricing of money transfers for a portion of this price sensitive market – immigrants and migrants – is very competitive, which means a negative impact on the margins of money transfer companies. In reality, rates vary according to the demand for different markets: sending money to the UK, for example, in Kenya currently costs nothing if you use MPESA accounts (the other corridors obviously have costs higher than that).
Oppenheimer would not specify what types of other financial services he was considering before being ready to be launched.
"We are still working on it, but you can imagine the path of immigrants or migrants and the challenges they face when they move to a new country," he said. "It can have a painful impact on not having a credit history: how to get a loan or create a bank account? This is the strategic angle … The idea is to transform the lives of immigrants and their families. "
It is this state of mind that has allowed Remitly to rise to this recent cycle. Generation – the investment company co-founded by Al Gore – Is given a mission to put his money into sustainability. In his case, this does not only mean the health of the planet, but also the health of people, in the form of services that improve life. Financial services for emerging markets is an important area in this regard.
Lucia Rigo, Director of Growth Equity at Generation and joining Remitly's Board of Directors in this round, said that she has been studying the remittance market for some time and that she has become a business. key within Remitly. in terms of its mission, its history so far, its number and especially its prospects.
"Foreign-born populations or foreign residents residing in developed markets are a segment that is simply not well-supplied," she said in an interview. "There are many digital ways to send money today, which greatly reduces the cost, but we also believe that digital penetration is in its infancy and that new markets will generate differentiation and expand the customer base. base, and Remitly's services. "
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