Sending money from the U.S. to Nigeria can be a painstaking process. For remittance platforms like Western Union, it will cost a carry cost and make between one to five business dates for coin transmit from a U.S. debit card to enter a Nigerian bank account.
Crypto remittance stages are rising to the challenge of correcting these cross-border payment issues by reducing time and costs. Only yesterday, we talked about Flux, a Nigerian fintech solving this problem in the present YC W2 021 quantity. Today, another YC-backed startup, Afriex — but from the Summer 2020 batch — is raising a $1.2 million grain round.
The company founded by Tope Alabi and John Obirije in 2019 provides instant, zero-fee movements to Africans at home and in the diaspora. It allows users to deposit cash on the app, cast coin to a bank account or another user, and withdraw fund to a connected bank or debit card.
Like other crypto remittance stages, Afriex has built its business on stablecoins — cryptocurrency backed by the dollar. In essence, the company buys cryptocurrency in one country and sells it in another to offer better exchange rates. This is in contrast to better-known platforms like Western Union and Wise that use traditional banking systems.
Last year while the startup graduated from YC, it claimed to be processing about $500,000 per month in busines fees and is applicable in over 30 countries. At the time, Afriex was only present in Nigeria and the U.S. But having started actions in Ghana, Kenya, and Uganda, Afriex claims to be processing millions of dollars each month. On the following website, though, Afriex states that customers can only send money to and from Nigeria, Ghana, Kenya, Canada, and the U.S.
With the new financing, the Lagos and San Francisco-based startup is looking to scale up by growing the team and expanding to other markets.
Pan-African VC firm Launch Africa preceded the seed round. Other investors include Y Combinator, SoftBank Opportunity Fund, Future Africa, Brightstone VC, Processus Capital, Uncommon Ventures, A$ AP Capital, Precursor Ventures, and Ivernet Holdings. Angel investors like Russell Smith, Mandela Schumacher-Hodge Dixon, Furqan Rydhan, and Andrea Vaccari also took part.
The SoftBank Opportunity Fund, an owned subsidiary of the SoftBank Group, targets founders of color in the U.S. moving early-stage startups. Since launching in June 2020, it invests in 22 startups and Afriex seems to be the only one catering to a adjust of users in the US and another continent.
This is due to Alabi’s upbringing as an immigrant child who has had a mix of both natures. It was difficult to send money to Nigeria and its own experience as a blockchain make at Consensys stimulated him realize he could solve a problem.
“We would go back home every two years and even then, I would always take note of what was missing and what could be enhanced. I would find myself having to pay for foreign expenses with coin that was sitting in a US bank account, ” said Alabi. “Traditional remittance business were so gradual and costly that I knew I could do it better with crypto. Remittance is the best and most important use case for crypto. Our goal is to build the world’s largest remittance firm, starting with emerging markets.”
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