Money Transfer Service Remitly Raises $38.5M to Expand to New Markets
Already serving three of the largest destination countries for money sent home by foreign workers in the U.S., Seattle-based Remitly has raised $38.5 million from investors to expand further and claim a greater share of the estimated $601 billion in annual global remittances.
Remitly says it is helping immigrant workers living in the U.S. send home more than $1 billion a year, and grew its business 400 percent in the first quarter compared to a year earlier.
“We’ve got a lot of customers sending a lot of money, and really the goal of this round is to take that model and continue to set up a global footprint,” says Remitly co-founder and CEO Matt Oppenheimer. The size of the funding is “reflective of how big we already are and how big we’re going to become. There’s definitely a desire to build that global financial technology company based here in Seattle.”
Stripes Group led the Series C round, with another new Remitly investor, Vulcan Capital, participating alongside earlier investors including DFJ, DN Capital, Bezos Expeditions, and Trilogy Equity Partners.
That brings total investment in Remitly—incorporated in 2011 as Beamit in Oppenheimer’s native Boise, ID—to $61 million. A 2011 Techstars Seattle graduate, Remitly has raised far more than any other company to go through the accelerator program locally.
Remitly is a mobile-first remittances service that allows people to send money from 49 U.S. states and the District of Columbia to recipients in the Philippines, Mexico, or India.
The U.S.-to-Mexico remittance corridor was the largest in the world, accounting for some $25.2 billion in 2015, according to the World Bank Migration and Remittances Factbook (see PDF). The second-largest corridor was the U.S. to China at $16.3 billion. Remittances from the U.S. to India—the third largest U.S. corridor, and fifth largest in the world—totaled $11.5 billion. The Philippines received $10.1 billion in remittances from the U.S., making it the fourth-largest U.S. corridor, and the seventh-largest corridor globally.
The World Bank estimates that 2015 remittances exceeded $601 billion, the vast majority of which flows from developed to developing countries, and dwarfs the flow of government aid. “The true size of remittances, including unrecorded flows through formal and informal channels, is believed to be significantly larger,” according to the World Bank factbook.
In addition to the new funding, Remitly announced Tuesday that its customers in Canada—which had some 7.4 million immigrants in 2013—can now send money to the same three destination markets.
Oppenheimer says Remitly is approaching an old and “astoundingly large” industry with patience and a focus on the largest markets first.
“We focused just on the Philippines for two or three years,” Oppenheimer says.
Competitors range from large banks and established money transfer companies like Western Union to other newer entrants such as Xoom (a unit of PayPal).
Remitly tries to win new customers, who often send home money on a regular basis, by offering competitive fees and earning trust through a service that does what it says it will do, Oppenheimer says.
That means funds are available to recipients exactly when Remitly says they will be, and the company is “holding ourselves accountable if there’s any sort of delay,” he says.
The Remitly service also offers features like Touch ID fingerprint recognition and documentation via mobile phone.
Remittance costs, worldwide, averaged 7.53 percent of the amount sent in the first quarter, according to the World Bank (PDF).
“A huge amount is taken from customers who are really working hard to get that money home,” Oppenheimer says.
Costs vary by market and are comprised of fees charged by remittance companies—which depend on how quickly the money is delivered, and the type of account from which it is sent—and a margin the companies take on the exchange rate, above the interbank rate.
Remitly charges no fee on a non-urgent (three banking days) transfer from the U.S. to Mexico. Express transfers, using a debit card, incur a fee of $3.99 and deliver money in minutes. The company’s quoted exchange rate Monday night was 17.28 pesos to the dollar.
“Fees need to be fair and transparent,” Oppenheimer says. “It’s part of our mission to bring them down, but it’s not a silver bullet. It’s not the only thing customers care about.”
Remitly, with a staff of 70 in Seattle and about 30 in the Philippines, intends to use a portion of its latest funding to hire for its product, engineering, and marketing teams.