The value of remittances globally continues to rise, and today a startup that has built a business targeting money transfers into emerging markets has raised a large round of growth funding to capitalize on that. WorldRemit, the London startup that has focused on enabling competitively-priced, quick money transfers from migrant workers and immigrants living in developed countries back home, typically in developing countries, has raised $175 million in a Series D round of funding from TCV, Accel and Leapfrog.
The company has to date focused on providing remittance services to individuals, specifically to help people living and working abroad to send money to friends and family back home, by way of an app. That business now covers 50 ‘send’ countries and 150 ‘receive’ countries, and some 4 million users, with the US (where it has a license to operate in all states) its biggest ‘send’ market today.
(This is a mixed message of growth, however: the company had 2 million users in 2017, so it’s doubled, but it also projected at that time that it would hit 10 million ‘customers connected to emerging markets’ by 2020 – which implies it thinks another 6 million users will be added in the next six months.)
WorldRemit says that the plan will be to continue growing the company’s business around individual transfers but also expand that also to more payments between small and medium businesses. Indeed, the company still has ‘remit’ in its brand name, but describes itself as a ‘mobile payments company’ in its announcement of the Series D.
The three investors in this round were all previous investors in WorldRemit, which has to date raised around $386 million.
The company is not disclosing its valuation officially, although a well-placed source tells me it is now north of $900 million.
For some context: Sources close to the company told us it was valued at just under $670 million at the end of 2017, when it raised its Series C. In November 2018, PitchBook noted that in an extension of the Series C, its post-money valuation was around $538 million: I’ve been told this is not accurate. “WorldRemit has never had a down round,” the source said.
In the last year, the company has also had a change of leadership. Ismail Ahmed, who co-founded the company with Catherine Wines, stepped down as CEO in September 2018 and a month later was replaced by Breon Corcoran, who had been previously the CEO of Paddy Power Betfair, an online betting company.
At the time, reports said Ahmed stepping down was to help prep for an IPO, although if that was accurate, raising this large round will likely put back the timeline on any listing for a while at least. (Ahmed remains non-executive chairman.)
“For more than eight years our core purpose has been and continues to be to help migrants send money to their families, friends and communities,” Corcoran said in a statement. “Our customers play a key role in the economies where they work and their remittances are important to their home countries. Our mission is to help them transfer money as securely and speedily as possible while reducing the cost to our customers. We will grow our business through differentiation on speed, service, security and value.”
The opportunity for remittances is a big one: the World Bank estimates that annual remittance flows to low- and middle-income countries reached $529 billion in 2018, up 9.6 percent and beating 2017’s then-record $483 billion figure. If you add in money sent to to high-income countries, remittances reached $689 billion in 2018, up from $633 billion in 2017, it said.
Although incumbents like Western Union still largely dominate the world of remittances, the rise of online payments and mobile technology (with phones themselves becoming proxies for bank accounts in some developing markets, as in the case of MPesa) has opened up an opportunity for new entrants into the field.
Amazon has recently teamed up with Western Union to help sell items in emerging markets: money that has been sent by transfer can now be used to buy goods. And Facebook, with its continuing interest in trying to do something in payments and remittances (although with very mixed results), is now dabbling in cryptocurrency, which could be another way to enable passing money from one person to another.
That is why, despite any growth hiccups, investors continue to bet big on the space — other big startup winners include Azimo, Remitly and TransferWise — and, specifically here, they continue to invest in WorldRemit so that it can develop its own technology both to compete with these other companies, and to build out its existing business.
“Over the past eight years, Ismail and his founding team have built a fantastic business that offers customers a compelling solution and value proposition,” said TCV General Partner John Doran in a statement. “Since passing the reins to Breon and the new management team last year, the business has continued to build on this platform and accelerated. We believe the opportunity and proposition is larger than ever.”
“Having first partnered with the WorldRemit team in 2014, I have seen the company grow from a London-founded startup to a global business pioneering the future of the remittance market and making international mobile payments more accessible and affordable for millions of individuals and businesses,” said Accel’s Harry Nelis in a statement. “This investment and CEO Breon Corcoran’s experience leading consumer service-oriented, global digital businesses will help fuel the next phase of global growth. We are excited to deepen our relationship with the team and help them fulfil the company’s vast potential.”
Updated with valuation provided by well-placed source.