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

For many emerging market economies, remittances have become a lifeline. Inflows exceed $669 billion in 2023, according to World Bank ResearchAnd they 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 strong hold on the remittance market with over 60% market share despite intense competition from new technology challengers. Some of these challengers, like Remitlyhas been universal, while others, such as Zepz and Tap SendWill remain privately owned — everyone is waiting for the rest.

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

Since its launch in 2020, LemFi has grown rapidly helping the expat community in North America and more recently emerging markets across Europe, Africa, Asia and Latin America. The four-year-old fintech boasts more than 1 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 15 others.

Last week, the company expanded into Europe by partnering with embedded finance provider Modular. The partnership will help LemFi kickstart operations until it secures its license next month after it acquires an Ireland-based Republic firm. With the move, LemFi—whose revenue comes from transaction fees and foreign exchange spreads—now ships from 27 markets and ships to 20 countries.

One way to gain company traction is through aggressive fraud detection. A recent one Report said that those who send money abroad are almost four times more likely to be victims of financial fraud than those who do not.

“Fraud can drive costs significantly. High costs often mean passing them on to customers with additional fees. We’ve been able to keep our fraud rate extremely low, allowing us to offer customers the best possible value,” said Lemfy Co-Founder and CEO. Ridwan Olalere told TechCrunch in an interview.

“So, we’ve built a brand and reputation within certain communities, as well as our user experience, that makes our customers refer it to their friends. This has helped us differentiate and grow faster than you would expect in such a competitive market.” About 70% of LemFi’s early 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 fintech will record $2 billion in annual transaction volume in 2023. Fast forward to now, and the remittance platform is processing half of the monthly payment volume — $1 billion — Olalere told TechCrunch in a recent interview. He attributes this growth to strong uptake in the Asian corridor, which generated $160 million in monthly TPVs and is growing 30% month-on-month in its first year of operation.

Olalere also shared that the company has doubled users, revenue and transactions in the last two years and this has played a role in attracting investor interest and confidence. This growth momentum was led by a Series B round led by Highland Europe, a London-based growth-stage investment firm that backs startups with annual revenues of more than €10 million.

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

LemFi will use the funding to expand its offerings, its payment network licenses and partnerships to provide hyper-localized services and hire talent for its next growth phase. The firm currently has more than 300 employees across Europe, North America, Africa and Asia.

“While regulations remain complicated by the market and we have more stakeholders to deal with, scaling has become much easier for us because we have technology that is adaptable and can easily plug and play across different payment methods and schemes,” Olalere, who founded LemFi with CFO Ryan CochraneNote that “So, we want to go into a lot of markets with a significant number of immigrants, starting with Europe this year, which is going to be a big focus for us.”