US remittance start-up Remitly lands $85m
Remitly, a US start-up which helps migrant workers send money abroad, has landed $85 million in an equity round.
Led by PayU, the round also saw participation from a series of previous backers.
These include DN Capital, Generation Investment Management, Owl Rock Capital, Princeville, Stripes, Threshold Ventures and Top Tier.
The fintech’s valuation now stands at $1.5 billion, according to TechCrunch.
Remittance market post-coronavirus
Whilst Remitly is newly well-capitalised, the remittance market as a whole is set to suffer from the pandemic.
The World Bank estimates that remittances sent to low and middle-income countries will fall 20% this year to $445 billion.
This is down from a record $554 billion in 2019. The economic slowdown is now seeing job cuts and wage losses in sending countries, and fast-forwarding countries to cashless models.
But Remitly’s co-founder and CEO, Matt Oppenheimer, says this downturn isn’t reaching his team.
“We aren’t seeing that downturn in remittances,” he tells TechCrunch.
“Over half of global remittances these days are sent via physical cash locations, and during a pandemic, many don’t feel as safe doing that, and so that will impact numbers.”
Oppenheimer says the fintech’s customer growth has increased by 200% compared to a year ago.
It tapped some 300 million customers in aggregate across the 17 send-from markets and the 57 send-to countries it operates in.
Oppenheimer says this is down to both its competitive rates and its insistence on doing it all virtually.
Incumbent remittance names such as Western Union or MoneyGram still operate physical kiosks. And whilst MoneyGram has splashed out more on digital in recent years, in the first quarter of this year just 18% of users’ money was transacted digitally.
The firm still relies heavily on physical channels – many of which are currently shut due to various countries’ continued lockdown measures.
Remitly, as well as offering remittance services, recently launched Passbook. Created in partnership with credit card provider Greendot, the partnership sees the start-up encroach further into the full financial services market for immigrants.
Yet to disclose user numbers, the fintech will use the fresh capital to develop new products – likely starting with a credit service.
Laurent Le Moal, PayU’s CEO and a member of Remitly’s board, has made clear the investor’s intentions with Remitly.
“We have not tried to acquire Remitly, and the reason is very simple: PayU is about payments and credit and so this is about integrating remittances, which are important in the markets where we are but we are not in [remittances] directly,” he says.
“This is a fantastic story, and this is an IPO type of company for sure. If we can help in that, that’s great.”
Oppenheimer has not commented on Remitly’s IPO plans.