LemFi moves remittances further into Asia and Europe with $53M in new funding

For many emerging market economies, remittances have become a lifeline. Inflows will exceed $669 billion in 2023, according to World Bank Researchand now represent a significant portion of GDP in these countries, often surpassing foreign direct investment as the primary source of foreign exchange.

Traditional banks and agents maintain a firm grip on the remittance market, with more than 60% market share despite fierce competition from new technological challengers. Some of these challengers, like Remitwent public, while others, such as Zepz and Tap Sendthey remain private property – all fighting for the remaining share.

LemFithe London-based financial services platform designed for immigrants, is one such new player. It is now armed with $53 million in new funding, which it will use to fuel efforts to acquire more customers and expand further into more countries.

Since its launch in 2020, LemFi has undergone rapid growth helping diaspora communities in North America and, more recently, Europe, send money to emerging markets in Africa, Asia and Latin America. The four-year-old fintech boasts more than a million active users who rely on its multi-currency accounts to transfer money to friends and family in countries like Nigeria, Kenya, India, China, Pakistan and more 15.

Last week, the company expanded into Europe in partnership with integrated finance provider Modulr. This partnership will help LemFi kickstart operations until it secures its license next month after acquiring a company based in the Republic of Ireland. With this move, LemFi, whose revenue comes from transaction fees and foreign exchange spreads, now operates in 27 mandate markets and 20 mandate countries.

One way the company has gained traction is through aggressive fraud detection. A recent one report says that people who send money abroad are almost four times more likely to fall victim to financial fraud than those who don’t.

“Fraud can significantly increase costs. Higher costs often mean passing on additional fees to customers. We have managed to keep our fraud rate extremely low, which allows us to offer customers the best possible prices,” co-founder and CEO of LemFi. Ridwan Olalere he told TechCrunch in an interview.

“So, we have built a brand and a reputation in certain communities for that, as well as our user experience, which makes our customers refer to their friends. That has helped us to differentiate and grow even faster than what expect in such a competitive market.” About 70% of LemFi’s first customers still use the platform, while 60% of its customer base is active annually.

When we reported on LemFi expansion in Asia and its broader strategy last April, Olalere revealed that the fintech has recorded more than $2 billion in annual transaction volume by 2023. Fast forward to now, and the remittance platform is turning half of that — $1 billion — into the monthly payment volume, Olalere told TechCrunch in a recent interview. He credited this growth to strong adoption in the Asian corridor, which earns 160 million dollars in monthly TPVs and grew 30% month on month in its first year of launch.

Olalere also shared that the company has doubled users, revenue and transactions in the last two years, and that has played a role in attracting the interest and confidence of investors. This growth momentum led to a series B led by Highland Europe, a London-based growth-stage investment firm that supports startups with more than €10 million in annualized revenue.

The round, which, according to Olalere, closed in just four months, also saw the participation of existing investors Endeavor Catalyst, Left Lane Capital, Palm Drive Capital, and Y Combinator, bringing LemFi’s total funding to $85 million.

LemFi will use the funding to expand its offerings, scale its payment network licenses and partners to provide a hyper-localized service, and recruit talent for its next phase of growth. The company currently has more than 300 employees in Europe, North America, Africa and Asia.

“While the regulations of the market for the market remain complex and we have more stakeholders to deal with, the scale has become much easier for us because we have a technology that is adaptable and can easily plug and play to different payment methods and schemes”, Olalere, who founded. LemFi with CFO Rian Cochrannoticed “So, we intend to go to as many markets as we have a significant number of immigrants, starting now with Europe this year, which will be a big focus for us.”