Remitly raises another $38M, adds World Bank’s IFC as it pushes into emerging markets
By Ingrid Lunden for TechCrunch
Remitly, a startup co-founded and led by a former executive of Barclays who saw a gap in the market to build money transfer and other financial services for emerging markets and the “unbanked”, is today announcing that it has raised $38.5 million, as well as expansion to seven more countries in Latin America. The funding, which brings the total raised by Remitly to just under $100 million, comes just nine months after Remitly raised the same amount in a Series C round, and underscores how the company is trying to seize a moment of growth.
“IFC is a clear win for us given their association with the World Bank and its network,” he said. “We hope to leverage [that] to continue to work towards improving trust and transparency around global remittances within our targeted market, developed to developing countries.” Currently the company lets people in the U.S. and Canada send money to Colombia, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Peru, India and the Philippines.
CEO Matt Openheimer describes this latest round as “opportunistic” in part because of the strategic investor it has gained: the International Finance Corporation, a part of the World Bank that arrange finance companies in emerging markets, is backing Remitly, alongside existing investor Silicon Valley Bank, in a round that is a mixture of debt and equity.
Remitly will be using the money to improve its money transfer service, making it faster and cost less for consumers. “Our cash-pick and instant transfer features continue to be very important to our customers, so this extra capital will help us continue to offer these unique services to customers as we grow our global footprint,” Oppenheimer added.
Weak oil prices and other economic declines have recently resulted in the smallest growth in remittances since the global financial crisis of 2007, according to the World Bank. But even so, the market for money transfers in emerging markets continues to grow for developing countries. In 2015, officially recorded remittances to developing countries totalled $431.6 billion, up 0.4 percent on 2014’s $430 billion. Global remittances — which include money sent to developed markets like the U.S. — actually contracted by 1.7 percent to $581.6 billion in 2015, from $592 billion in 2014.
(Remitly’s remittance estimates appear to be slightly higher for last year, at $600 billion.)
The market is big, but so is the level of competition in it. For starters, there are incumbents like Western Union who dominate the market for money transfers, even if in many cases they are doing so at a higher cost than competitors. Others like WorldRemit and Xoom (owned by PayPal) are also going after the same market, using tech — and in this case, the use of mobile handsets, which are much more ubiquitous in emerging markets over computers — to disrupt and overtake some of the older and less efficient ways of doing things.
“Remitly’s mission is perfectly aligned with IFC’s long-standing objective of helping the private sector find solutions that benefit the world’s poor,” said Kai Schmitz, who leads IFC’s Fintech investments in Latin America, said in a statement. “Transfers by migrants to their home countries is a proven way to improve the lives of families and support emerging market economies. The World Bank is actively working with the G20 and other partners to increase choice for senders and lower the cost of remittances. Remitly is a great example how technology can be used to achieve these objectives.”
Co-founder and CEO Matt Oppenheimer said the company is not disclosing its valuation in this round, but as we reported in December, the last round was made at a $170 million valuation, meaning that Remitly is potentially looking at a valuation of around $230 million currently.
“More important to us than valuation is the consistent growth we continue to achieve in our customer base and transaction amounts and volume,” Oppenheimer told me. Nine months ago, the company passed $1 billion in transaction volume in aggregate, and it’s now on track to push that to $1.5 billion this year. “We’re also north of 2 million transactions made per year, all while we see more than 90% of our customers return to us when they need to send money,” he said.
Other investors that back Seattle-based Remitly include the Stripes Group, DFJ, DN Capital, QED Investors, Trilogy Equity Partners, Bezos Expeditions, Founders’ Co-Op, International Finance Corp., and TomorrowVentures.
First appeared at TC