LemFi moves remittances to Asia and Europe with $53 million in new funding

For many emerging market economies, remittances have become a lifeline. Inflows exceeded $669 billion in 2023, according to estimates World Bank researchThey now account for large portions of GDP in these countries, often surpassing foreign direct investment as a major source of foreign exchange.

Traditional banks and agents maintain a strong grip on the remittance market, with a market share of more than 60% despite fierce competition from new technology rivals. Some of these competitors, e.g Capablywent public, while others, such as Zepz and Click Submitremain privately owned – all vying for the remaining share.

LemFiThe London-based financial services platform designed for migrants is one of these new companies. It is now armed with $53 million in new funding, which it will use to boost efforts to acquire more customers and expand into more countries.

Since its launch in 2020, LemFi has seen rapid growth by helping diaspora communities in North America and, more recently, Europe, send money to emerging markets across Africa, Asia and Latin America. The four-year-old fintech company boasts of over a million active users who rely on its multi-currency accounts to transfer money to friends and family in countries like Nigeria, Kenya, India, China, Pakistan and 15 other countries.

Last week, the company expanded into Europe by partnering with embedded financing provider Modulr. This partnership will help LemFi kick-start its operations until it obtains its license next month following the acquisition of a Republic of Ireland-based company. With the move, LemFi – whose revenues come from transaction fees and foreign exchange rate differences – operates in 27 sending markets and 20 sending countries.

One way the company has gained traction is through aggressive fraud detection. A modern one a report He says people who send money abroad are almost four times more likely to fall victim to financial fraud than those who don’t.

“Fraud can drive up costs significantly. High costs often mean they are passed on to customers through additional fees. “We have been able to keep our fraud rate very low, which allows us to provide customers with the best rates possible,” Co-Founder and CEO LemFi. Redouane Olalere He told TechCrunch in an interview.

“So, we’ve built a good brand and reputation in certain communities because of that, plus our user experience, which has our customers referring them to their friends. That’s helped us stand out and grow faster than you’d expect in such a competitive market. It’s still about 70% of LemFi’s first customers are using the platform, while 60% of its customer base is active annually.

When we reported on LemFi’s Expansion into Asia and its broader strategy Last April, Olaler revealed that the fintech recorded more than $2 billion in annual transaction volume in 2023. Going forward so far, the remittance platform is processing half of that — $1 billion — in monthly payment volume, Olaler told TechCrunch in an interview. I recently ran with him. He attributes this rise to strong adoption in the Asian corridor, which generates $160 million per month from TPV and is growing 30% month-on-month during its first year of launch.

Olalere also noted that the company has doubled the number of users, revenue and transactions over the past two years, and this has played a role in attracting investor interest and confidence. This growth momentum led to a Series B round led by Highland Europe, a London-based growth-stage investment firm that backs startups with over €10 million in annual revenue.

The round, which, according to Olalere, closed in just four months, also saw participation from existing investors Endeavor Catalyst, Left Lane Capital, Palm Drive Capital and Y Combinator, bringing LemFi’s total funding to $85 million.

LemFi will use the funding to expand its offerings, scale its payment network licenses and partnerships to provide a hyper-local service, and recruit talent for its next growth phase. The company currently employs more than 300 employees across Europe, North America, Africa and Asia.

“Although the regulations for each market are still complex and we have more stakeholders to deal with, scaling has become much easier for us because we have technology that is adaptable and can easily be connected and operated with different payment methods and systems,” Olalire, who founded LemFi with CFO Ryan Cochranmale. “Therefore, we intend to go to several markets where we have a large number of immigrants, starting now with Europe this year, which will be of great interest to us,” he added.