WorldRemit, a London-based startup with some 2 million users that offers a quick way for people to send money to each other with a focus on developing markets, has raised more funds to help it take on the likes of Western Union in the remittances market, estimated by the World Bank to be worth some $596 million globally this year. The company has picked up $40 million — a Series C round that sources tell us brings the company’s valuation to around $668 million (or ‘just under £500 million’ in the figure we were given in local currency by our sources).
The funding was led by a new, strategic investor: LeapFrog Investments, the firm founded in 2007 and backed by billions from the likes of Prudential, JP Morgan and the Omidyar Network specifically to make investments into financial services and healthcare businesses improving services in emerging markets, specifically in regions like Africa and Asia. Previous investors Accel, TCV and an unnamed individual backer also participated.
This represents a decent leap for the startup, which was valued at $500 million when it last raised money — $45 million in February 2016.
Ismail Ahmed, who co-founded WorldRemit with Catherine Wines and is now its CEO, said in an interview that the idea will be to use the funding in three key areas.
The first of these is to increase the number of countries where payments will be able to originate. Currently, the company lets people from 50 countries send money through to 148 countries, and Ahmed wants to bring complete parity to those figures, so that people can transfer money from any country to any country. Specifically with this round, that functionality will get turned on in Africa.
“Half of our transactions today go to Africa, and those are mostly digital transactions going into to mobile money accounts in services like M-Pesa. This means everyday we trade with all the assorted currencies that are in use in Africa,” he explained. “I think the next phase of our growth is to turn those ‘receive’ countries into ‘send’ countries. That’s the demand we’ve seen. In the past we didn’t want to do that because we didn’t want to transact in cash, but now because our users are making most digital transactions, we can.”
He points out that 90 percent of WorldRemit’s customers — 1 million users — are using smartphones for their transactions — a pretty impressive proportion in itself, considering how low down Africa generally has traditionally been in world rankings for internet and telephony access.
The second area WorldRemit is hoping to expand is in Asia. Specifically, the company is planning to open a new office in the Philippines with 100 more employees, to help build out its business in that region.
This is also notable: to date, WorldRemit to date has mainly grown organically, and that is what it plans to do here. But there is a big opportunity to expand WorldRemit’s footprint by way of acquisition: there are a number of startups competing with the likes of Western Union and MoneyGram to provide lower-cost and faster remittance services globally, but interestingly, many of them have been building their services with relatively little overlap of the regions that they are targetting first. (Remitly, for example, has been focusing a lot on the opportunity to send from the US to India, among other regions.)
“So far we have seen consolidation in the world of traditional money transfers, where the three largest players are still consolidating some of the smaller players,” Ahmed said. “But as companies like us become more global and taking a regional focus, we may see some M&A too.”
The third area of focus is to keep beefing up its business in the US. Today the country accounts for 14 percent of WorldRemit’s origination traffic by revenues, and the plan will be to boost this to 40 percent.