TransferWise. WorldRemit. And now Remitly.
Seattle-based Remitly announced a $220 million cash infusion late Tuesday, becoming the third mobile remittance company in the past two months to raise more than $100 million.
The investment in the Techstars Seattle grad includes $135 million in equity and $85 million in syndicated debt financing, or a revolving credit line. Remitly has raised more than $311 million in equity to date and is now valued at just under $1 billion, according to people familiar with the deal, as it closes in on an elite group of Seattle-area “unicorn” companies.
Generation Investment Management, a London-based fund co-founded by former vice president Al Gore, led the Series E round.
Founded in 2011 as Beamit Mobile, Remitly uses mobile technology to help people send and receive money across borders, including immigrants who support families back home. It is an extremely hot sector of the financial tech market.
London-based WorldRemit raised $175 million last month at a near-$1 billion valuation, and TransferWise, another London company, was valued at $3.5 billion after a $292 million secondary funding in May.
Driving the private investment is a boom in money transfers.
Remittances to low-and-middle-income countries reached a record $529 billion last year, according to The World Bank, up 9.6 percent year-over-year. Total global remittances reached $689 billion in 2018, up from $633 billion the year prior. Digital payments are also on the rise.
Companies such as Remitly let people send and receive money via smartphone apps, eliminating forms, codes, agents, and other fees typically associated with the international money transfer process.
Controlling that entire process — from compliance to security — lets the new breed of money transfer companies offer lower fees than many traditional competitors.
“We deliver funds in much more reliable, secure, and consistent fashion,” said Remitly CEO Matt Oppenheimer.
Remitly allows people to move money from 16 “send” countries such as the U.S., U.K., and Canada, to 44 “receive” countries, including several developing nations such as the Philippines, India, El Salvador, Guatemala, Honduras, and Nicaragua.
Customers sent more than $6 billion with Remitly last year — up from $4 billion in 2017. It partners with thousands of bank and cash payout companies around the world.
Annual revenue was not disclosed. But with over one million people having used the Remitly service, the company said that its revenue growth is close to 100 percent over the past three years.
Oppenheimer, who helped come up with the idea for Remitly while working for Barclays Bank in Kenya, sees more opportunity.
The company controls less than one percent of a remittance market that’s dominated by physical locations such as Western Union or MoneyGram, which Oppenheimer says “will be a thing of the past” as consumers trust their smartphone for financial services.
“As that transition occurs, there will be a few very large players that succeed in this space,” Oppenheimer said. “We are in the pole position to be the largest, starting with remittances and then broader financial services.”
The fresh cash will help Remitly expand its remittance services to more countries and also develop new products. Oppenheimer wouldn’t reveal specific details, but hinted at other financial pain points immigrants face, such as getting a loan with no credit history or opening a bank account without proper documentation, for example.
“You can get a sense that our vision is very intentionally around broader financial services,” he said.
TransferWise is expanding, too, and just unveiled a new travel debit card that works in more than 40 currencies. WorldRemit launched a B2B product last month.
Remitly is smaller than its London rivals, but it is the largest independent international money transmitter in the U.S. It is registered with U.S. Department of Treasury and authorized to do business in all 50 states.
Other competitors include Xoom and Western Union, which this year partnered with Amazon — the former employer of Remitly co-founder Josh Hug.
Facebook also recently announced its global digital currency project Libra, which is targeted at the unbanked and also takes advantage of smartphone technology.
“People will be able to send, receive, spend, and secure their money, enabling a more inclusive global financial system,” Libra’s marketing message reads. Facebook’s ambitious plan includes support from Visa, Uber, Andreessen Horowitz and other industry leaders.
Oppenheimer said he’s watching blockchain and related trends closely but hasn’t seen anything that will substantially increase customer value, including Libra.
Marc-David Seidel, a RBC Financial Group professor of entrepreneurship at the University of British Columbia, said the growth of mobile remittance startups is part of a larger pattern across various industries.
“Previously dominant organizations that have relied on their centralized dominant positions, and charged higher fees because of that power, are being displaced by newer technology-enabled solutions,” he said.
But Remitly could be disrupted, too, Seidel argued.
“We are basically in an transition phase historically where the big dominant players are starting to lose some power to new tech-enabled solutions, which will start to lose any power they gain to more decentralized solutions that are coming quickly,” he said.
In March, Remitly partnered with Visa to let people send money to Visa debit cards across borders through the Visa Direct push payment service. The company also made its second acquisition in May, buying small Seattle startup Symphoni.
The $135 million equity investment is the largest for a Seattle startup this year, according to GeekWire’s funding tracker. New investors in the Series E round include Owl Rock Capital, Princeville Global, Prudential Financial, Schroder Co Bank AG, and Top Tier Capital Partners. Previous backers including DN Capital, Naspers’ PayU (which led a $115 million investment in 2017) and Stripes Group also re-upped.
“Remitly has approached their digital-first product with a deep passion for the customers they serve, and a commitment to improving transparency and efficiency in cross-border money transfer,” Lucia Rigo, director in growth equity at Generation Investment Management, said in a statement. Rigo will join Remitly’s board as a result of the funding.
The debt financing came from Barclays, Bridge Bank, Goldman Sachs, and Silicon Valley Bank. A syndicated loan can be used as a specific amount of funds and/or a credit line. Chinese tech giant Tencent used the loan when it raised $4.65 billion from a group of financial giants in 2017. Remitly will use it to support its express fast-pay offering.
“We’re excited about not only the amount of investment but the quality of investors we’re bringing on board,” Oppenheimer said.
Other early investors include Threshold Ventures (formerly DFJ Venture), Trilogy Equity Partners, Bezos Expeditions, Founders’ Co-Op, and Tomorrow Ventures.
Asked about a potential IPO, Oppenheimer said the company isn’t focused on going public.
Remitly employs 200 people at its Seattle HQ and another 800-plus at additional offices in London, Manila, and Managua, and is considered a leader in Seattle’s emerging fintech industry. There were 659 fintech-related investments last year in the U.S. worth $11.9 billion, both record highs, according to CBInsights.
It was a finalist for Next Tech Titan at the GeekWire Awards earlier this year — Oppenheimer was also a finalist for CEO of the Year — and is ranked No. 6 on the GeekWire 200 index of top Pacific Northwest startups.