Seattle-based startup Remitly has raised another $12.5 million to help Indian and Filipino immigrants send money home from the U.S., according to a March 19 press release.
The Series B funding round, which, according to Tech In Asia, more than doubled the amount the company has now raised to $23 million, was led by DFJ with participation from DN Capital and existing investors QED Investors and Trilogy Equity Partners. As part of the investment deal, DFJ partner William Bryant will join Remitly’s board.
Remitly plans to use the new capital to staff up, increase its marketing efforts and expand to new countries. The company hasn’t said what those new countries will be, but the Top 3 countries receiving remittances worldwide are India (which gets $71 billion annually), China ($64 billion) and the Philippines ($28 billion), and Remitly already has two of those three covered.
Another possible expansion region where the company might expand is Africa. Remitly CEO Matt Oppenheimer told Tech in Asia that he saw the need for a better remittance channel when he worked for Barclays in Nairobi, Kenya. “While living in Africa, I saw firsthand the many barriers people faced when sending money to friends, family, and businesses. It was incredibly expensive and the process was arduous and slow. We started Remitly because we knew we could change that,” he said.
But while that’s an opportunity, it’s also a challenge in some war-torn regions of the continent because of stepped up enforcement of regulations intended to fight terrorist funding. The last U.S. bank that allowed remittances to Somalia, Merchants Bank of California, cut off the $160 million to $180 million in annual money transfers, citing potential liability if a transfer it made was linked to terrorism.
For the moment, though, Remitly’s expansion challenge is capturing market share from established money-transfer companies like Western Union and MoneyGram. Remitly does that by using technology to keep costs down — on average, customers pay a 7.9 percent fee to send money internationally, but Remitly’s charges average 2 percent.
The company also uses tech to reduce the foreign-exchange spread that raises costs of currency conversions, and is designed to let users perform the transfers through mobile devices instead of maintaining a chain of offices.