Remitly, a Seattle startup that helps immigrants in developed countries send money home to family and friends in developing nations, is raising new funding to tackle the $700 billion money-transfer market. It secured $135 million in equity financing and $85 million in debt at a valuation just shy of $1 billion, according to a person familiar with the deal. Generation, a sustainability-focused investment firm cofounded by Al Gore, is leading the equity round. Additional investors include Swiss asset manager Schroders, Naspers’ PayU and Stripes Group, among others. To date, Remitly has raised $312 million in equity investment.
Matt Oppenheimer, 37, started Remitly in 2011 after running internet and mobile banking at Barclays in Kenya. He recruited engineer Shivaas Gulati and Josh Hug, an entrepreneur who had recently sold a startup to Amazon, as cofounders. Initially, they focused on one market, letting immigrants living in America send money to the Philippines. Today they let consumers ship cash from 16 developed nations like the U.S., the U.K. and Australia to 44 developing countries including Mexico, El Salvador and Rwanda.
Like most other fintech companies, Remitly leans on technology to lower costs. It owns no retail outlets. Customers can only initiate a transfer digitally, although on the receiving end in developing countries, Remitly partners with cash-pickup locations. It makes money by charging transaction fees and marking up foreign exchange rates. Fees vary widely by country, but on average, Remitly charges about 1.5% for a transfer, Forbesestimates.
Western Union, which owns many brick-and-mortar locations and brought in $852 million in profit last year, charges roughly 5%. Remitly has grown revenue nearly 100% annually over the past three years, reaching an estimated $80 million in 2018 and recently earning a spot on Forbes’ Fintech 50 list.
Oppenheimer will use his new $85 million in debt to help speed up money transfers. Remitly can pre-fund some transfers with this line of credit, letting customers in developing countries receive cash minutes after someone in another nation presses send on her smartphone or computer.