The company was founded in 2011 and has reportedly seen a 100pc revenue growth each year.
Seattle-based start-up Remitly announced this morning (10 July) that it raised $220m in equity and debt from a number of investors.
In a break-down of the figure, TechCrunch reported that $135m of the funding was led by Generation Investment Management, while $85m was in debt from Barclays, Bridge Bank, Goldman Sachs and Silicon Valley Bank. A number of other investors participated in the equity round, including Prudential Financial, Schroder & Co Bank AG and Top Tier Capital Partners.
Sources close to the company now say that Remitly’s valuation is somewhere between $950m and $1bn, bringing Remitly pretty close to competitor World Remit, which also has a valuation around $900m. Remitly’s last valuation was in early 2018, when the company was estimated to be worth $230m after a $115m funding round led by Naspers.
Western Union, which unlike Remitly and World Remit, spends a considerable amount of money running bricks-and-mortar retail outlets. Western Union made $852m in profit last year by charging users a 5pc service charge. In 2018, Remitly’s profits were around $80m, which landed the company on Forbes’ Fintech 50 list.
The company was founded in 2011 and has reportedly seen a 100pc revenue growth each year. Founder and CEO Matt Oppenheimer set up the money transferring service after he spent time living in Asia and Africa and witnessed how inconvenient and expensive international money transfers were.
Set up specifically for immigrants who pay remittance to their families at home, Remitly’s aim is to change the existing system in which 8pc of the $500bn transferred internationally each year is paid in fees to the existing companies that offer transfer services.
“That 8pc is $40bn. $40bn! Earned by people living away from their family, missing their family. It’s not only taken, but it’s taken in a way that is not transparent, and it is sent home in a way that is not convenient for the customer,” Oppenheimer explained.
He added,“The great thing is, because of smartphone growth, and mobile phone growth generally, you can give the power and the control back to people’s fingertips, to be able to get more money back in a much more affordable and transparent way.”
When Remitly first launched, it focused on one market, between America and the Philippines. Today, customers can digitally transfer cash from 16 “send” countries including Ireland, the UK and the US, to 44 “receive” countries around South America, Asia, Eastern Europe, the Middle East and Africa.
Remitly’s service takes into consideration the fact that many people on the receiving end of remittance don’t actually have a bank account, so the company partners with pickup locations in receiving countries to help families access the cash their relatives send home. Remitly charges an average of 1.5pc on these transactions, according to Forbes, which is how the company makes money.
Remitly will use the fresh funding to grow the company and “catch new opportunities as they appear”, while looking out for new financial services the company can extend to the immigrants and migrants the app serves.
Oppenheimer said the company has big plans ahead, and dropped some vague information about Remitly’s next product which will focus on easing the pains of migrant workers who can’t get loans, bank accounts or insurance without a credit history.
The $85m Remitly collected in debt from Barclays (where Oppenheimer used to work as an executive before founding this start-up) and other banks will go towards speeding up money transfers, allowing customers on the receiving end to collect their cash within minutes of the money being transferred online.