Coming from South Africa but living in Europe, I can tell you that sending money to family and friends back home is a bit of a nightmare. Typically, you have to use a traditional bank, which can take a week or more, or payment apps like PayPal or Wise, which charge high fees.
The outdated nature of remittances is a problem that immigrants consider too familiar with. The demand for better alternatives is giving rise to a new cohort of financial technology businesses looking to streamline the process. One of them is LemFi, which is headquartered in London.
Founded in 2021, the financial services platform allow diaspora communities in North America and Europe to send money quickly and affordably to friends and family in China, India, Pakistan, Nigeria, Kenya and 15 other countries of the South. Unfortunately, for me, South Africa is not on the list yet. However, LemFi is growing quickly, so I may not have very long to wait.
LemFi has already onboarded 1 million customers so far, who have made a total of $1 billion in monthly transactions through the app. Transactions to and from Asia are currently growing 30% month-over-month, the company said. And last week, LemFi, which employs more than 300 people, officially open a store in Europe. The startup operates a global remittance marketplace predicted to reach $1.3 trillion by 2032.
All this growth potential has, unsurprisingly, piqued the interest of venture capital firms. Today, LemFi announced it has raised $53 million in Series B funding. Growth-stage venture capital firm based in London Highland Europe led the round, with participation from previous investors Left Lane Capital, Palm Drive Capital and Y-Combinator. This new funding brings the total raised by LemFi to $85 million.
“When we started building LemFi, we were told that remittances had already been resolved,” said Ridwan Olalere, co-founder and CEO of LemFi, pictured left. “But for too many people it still remains too slow, cumbersome and expensive, with customers telling us that in some cases it was cheaper to send money from the US via Canada than directly to their family back home. in the country.”
Olalere, originally from Nigeria, founded LemFi alongside Norwegian Rian Cochran. The two met while working at Nigerian fintech unicorn OPay, incubated by Norwegian browser provider Opera.
Fueled by new funding, LemFi is now looking to add new features and expand to new countries, Olalere said.
There is no doubt that part of LemFi’s popularity is that it advertises no transaction fees. Well, unless you live in China, India or Pakistan. The company also earns revenue from currency exchanges. Its business model relies on volume, making small profits on many transactions while remaining competitive for users looking for low-cost international money transfers.
LemFi is far from alone in the increasingly crowded remittance fintech market. Perhaps the best-known company is US-based Remitly, which went public in 2021. Other contenders include startups. Zepz and Taptap Send, headquartered in London.