Y Combinator-backed fintech startup Afriex has raised a seed funding round worth USD$1.2 million (approx. UGX4.3 billioin) as it bids to scale its payments and remittances platform across Africa.
Based in the United States and Nigeria, the platform processes millions of dollars in payments for thousands of Africans in the diaspora and in Africa —and grew 20 times in 2020. It is now set for even grow quicker after securing US$1.2 million seed funding round after taking part in Y Combinator’s Summer 2020 Cohort.
Pan-African VC firm Launch Africa led the seed round. Other investors include Y Combinator, SoftBank Opportunity Fund, Future Africa, Brightstone VC, Processus Capital, Uncommon Ventures, A$AP Capital, Precursor Ventures, and Ivernet Holdings. Angel investors like Russell Smith, Mandela Schumacher-Hodge Dixon, Furqan Rydhan, and Andrea Vaccari also took part.
Founded in late-2019, Afriex provides instant, zero-fee transfers to Africans at home and in the diaspora. The startup’s platform allows users to deposit cash on the app, send money to a bank account or another user, and withdraw money to a connected bank or debit card.
Sending money overseas is still slow and expensive. Afriex fixes this by buying cryptocurrency in one country and selling it in another to offer better exchange rates and faster transfers than banks or other transfer services.
Founder and Chief Executive; Afriex, Mr. Temitope Alabi said it had always been his dream as an immigrant child growing up in the US to be able to make an impact at scale. “I would find myself having to pay for foreign expenses with money that was sitting in a U.S. bank account. Traditional remittance companies were so slow and expensive that I knew I could do it better with crypto,” said Alabi. Adding that remittance is the best and most important use case for crypto.
Alabi says their goal as Afriex is to build the world’s largest remittance company starting with emerging markets.
Whereas the likes of Western Union and Transferwise built their businesses on top of the traditional banking system, Afriex uses stablecoins – cryptocurrency backed by the U.S. 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
“We don’t have to hold inflationary currencies – we can just hold USD and crypto allows us to source better exchange rates,” Alabi said.
Initially active only in the US and Nigeria, Afriex has now started operations in three new countries, namely Ghana, Kenya, and Uganda, and will use the investment [USD$1.2 million (approx. UGX4.3 billioin)] to grow its team and expand into further new markets, speeding its vision to be the fastest, cheapest way to send money to anyone in the world.