The $580 billion remittance market is poised for greater competition, as London based WorldRemit raises $100 million from a leading Silicon Valley investor.
The funding round is led by Silicon Valley venture capital firm, Technology Crossover Ventures (TCV), which has an A-list portfolio of previous technology investments. In the past, it has invested in Facebook, GoDaddy, Expedia, Netflix, Spotify, and VICE Media among others.
WorldRemit was founded in 2010 by Ismail Ahmed, a Somali entrepreneur and a former adviser to the UN. Earlier in March 2014, WorldRemit had raised $40m from the Silicon Valley group Accel Partners – the largest ‘series A’ funding round for a European financial technology business.
Just weeks before, the London based money transfer startup TransferWise raised $58 million in a round led by Andreessen Horowitz, a Silicon Valley investor group. Venture capitalist Ben Horowitz has now joined the company's board. The recent deals are a good illustration of how confidence is growing in the British technology.
WorldRemit offers a cheaper alternative to traditional remittance services like Western Union and MoneyGram, letting customers send funds overseas. WorldRemit’s commissions for transferring money are significantly lower than those charged by larger outfits like Western Union, and it does so by using online and mobile technology. Online remittances could become a multibillion dollar opportunity, as internet transfers account for about 5% of the overall remittances market. With a growing penetration of smartphones and other devices, the online remittance business will surely grow in next few years.
90% of WorldRemit payments are received instantly, and users are charged a small percentage of the transaction – the fee could be as little as 95 euro cents. Recipients can accept the money as cash, in a bank account, as phone credit, or in mobile wallets. Moreover online remittance makes it easier to verify the identity of customers in an industry where crime rates are high.
The company has said that its revenues tripled in 2014 to £15.2 million, and expects similar growth in 2015. WorldRemit currently processes around 1.3 million transactions a year. WorldRemit’s service is available in 50 countries and sends to 117 recipient countries. The London based firm is planning to use the funds for international expansion.