Challenges of Sending Money to Nigeria

The process of transferring funds from the United States to Nigeria can often be complex and time-consuming. Established remittance services, such as Western Union, typically impose transfer fees and require between one and five business days for funds to reach a Nigerian bank account when originating from a U.S. debit card.

Crypto Remittance Platforms Offer Solutions

A growing number of cryptocurrency-based remittance platforms are emerging to address these inefficiencies in cross-border payments, aiming to reduce both the time and cost associated with international money transfers.

Recently, attention was given to Flux, a Nigerian fintech company tackling this issue as part of the YC W2021 cohort. Now, Afriex, another startup supported by Y Combinator – specifically from the Summer 2020 batch – has secured $1.2 million in seed funding.

Introducing Afriex: Instant and Fee-Free Transfers

Founded in 2019 by Tope Alabi and John Obirije, Afriex facilitates instant, zero-fee money transfers for Africans both residing on the continent and those in the diaspora.

The platform enables users to deposit cash directly within the application, send funds to bank accounts or other users, and withdraw money to linked bank accounts or debit cards.

Leveraging Stablecoins for Efficient Exchange

Similar to other crypto remittance services, Afriex operates using stablecoins – cryptocurrencies whose value is pegged to a stable asset like the U.S. dollar.

Essentially, the company purchases cryptocurrency in one country and subsequently sells it in another, enabling more favorable exchange rates compared to traditional systems.

This approach contrasts with well-known platforms like Western Union and Wise, which rely on conventional banking infrastructure.

Growth and Expansion

During its Y Combinator graduation last year, Afriex reported processing approximately $500,000 in monthly transaction fees and serving users in over 30 countries.

Initially focused on Nigeria and the U.S., Afriex has since expanded operations to Ghana, Kenya, and Uganda, and now claims to process millions of dollars in transactions each month.

However, the Afriex website currently indicates that money transfers are only supported between Nigeria, Ghana, Kenya, Canada, and the U.S.

Future Plans

The newly acquired investment will be used by the Lagos and San Francisco-based startup to scale its operations through team expansion and further market penetration.

Investment Details

The seed round was led by Pan-African VC firm Launch Africa.

Additional investors include Y Combinator, SoftBank Opportunity Fund, Future Africa, Brightstone VC, Processus Capital, Uncommon Ventures, A$AP Capital, Precursor Ventures, and Ivernet Holdings.

Angel investors such as Russell Smith, Mandela Schumacher-Hodge Dixon, Furqan Rydhan, and Andrea Vaccari also participated in the funding round.

SoftBank's Focus on Diverse Founders

The SoftBank Opportunity Fund, a division of the SoftBank Group, specifically targets early-stage startups led by founders of color in the United States.

Since its launch in June 2020, the fund has invested in 22 startups, with Afriex being the only one focused on serving users in both the U.S. and another continent.

The Founder's Story

Tope Alabi’s personal experiences as an immigrant child, navigating both cultures, fueled the creation of Afriex.

He encountered difficulties sending money to Nigeria and, leveraging his background as a blockchain developer at Consensys, recognized an opportunity to provide a better solution.

“Returning home every two years highlighted areas for improvement, particularly the challenges of accessing funds held in U.S. bank accounts,” Alabi explained. “The slowness and expense of traditional remittance companies convinced me that crypto could offer a superior alternative. We believe remittance represents the most impactful application of cryptocurrency.

Our ambition is to become the world’s leading remittance company, beginning with emerging markets.”