Lemfi Secures $53M to Expand Remittances in Asia & Europe

Remittances as a Vital Economic Force

For numerous developing economies, money sent home by citizens working abroad has become critically important. World Bank data indicates that these inflows exceeded $669 billion in 2023. These remittances now constitute a substantial percentage of GDP in recipient nations, frequently surpassing foreign direct investment as the primary source of foreign currency.

Dominance of Traditional Players and Rise of Fintech

Despite growing competition from innovative technology companies, established banks and money transfer agents continue to control over 60% of the remittance market. Several of these newer competitors, such as Remitly, have successfully launched initial public offerings. Others, including Zepz and Taptap Send, continue to operate as private entities, all competing for a larger portion of the market.

LemFi Secures New Funding for Expansion

LemFi, a financial services platform based in London and focused on the needs of immigrants, is a recent entrant into this competitive landscape. The company has recently obtained $53 million in new investment. These funds will be allocated to customer acquisition initiatives and further geographic expansion.

Rapid Growth and User Base

Since its inception in 2020, LemFi has experienced significant growth by facilitating money transfers from diaspora communities in North America and, more recently, Europe, to emerging markets throughout Africa, Asia, and Latin America. The fintech company currently serves over 1 million active users. These users utilize its multi-currency accounts to send funds to family and friends in countries including Nigeria, Kenya, India, China, Pakistan, and 15 additional nations.

European Expansion via Strategic Partnership

The company broadened its reach into Europe last week through a collaboration with Modulr, an embedded finance provider. This partnership will enable LemFi to initiate operations while awaiting its license, which is expected to be granted next month following the acquisition of a firm based in the Republic of Ireland. Consequently, LemFi now operates in 27 countries where funds can be sent from, and 20 countries where funds can be sent to.

Combating Fraud in Remittance Transfers

LemFi has distinguished itself through robust fraud prevention measures. Recent reports demonstrate that individuals sending money internationally are almost four times more susceptible to financial fraud compared to those who do not.

Maintaining Low Costs Through Fraud Mitigation

“Effectively minimizing fraud is crucial for cost control. Higher costs often necessitate passing those expenses onto customers in the form of additional fees,” explained Ridwan Olalere, co-founder and CEO of LemFi. He co-founded LemFi with CFO Rian Cochran after their time together at African fintech company OPay. “Our success in maintaining a remarkably low fraud rate allows us to provide customers with the most competitive pricing available.”

Customer Loyalty and Referrals Drive Growth

Olalere continued, “We have cultivated a strong brand and reputation within specific communities, attributable to both our fraud prevention efforts and our positive user experience. This has fostered customer loyalty and encouraged referrals, enabling us to differentiate ourselves and achieve faster growth than typically seen in this highly competitive market.” Approximately 70% of LemFi’s initial customers remain active users, and 60% are active on a yearly basis.

Significant Increase in Transaction Volume

In April of last year, when LemFi’s expansion into Asia and overall strategy were reported, Olalere revealed an annual transaction volume exceeding $2 billion in 2023. Currently, the remittance platform processes $1 billion in monthly payment volume, a substantial increase. This growth is largely attributed to strong adoption within the Asian corridor, which generates $160 million in monthly transaction volume and is experiencing 30% month-over-month growth in its first year.

Doubling of Key Metrics Attracts Investment

Olalere also stated that the company has doubled its user base, revenue, and transaction volume over the past two years. This positive trajectory played a key role in attracting investor interest and confidence. This momentum culminated in a Series B funding round led by Highland Europe, a London-based investment firm specializing in growth-stage startups with revenues exceeding €10 million annually.

Series B Funding Details

The funding round, which closed within four months according to Olalere, also included participation from existing investors Left Lane Capital, Palm Drive Capital, and Y Combinator, as well as new investors such as Endeavor Catalyst. This brings LemFi’s total funding to $85 million.

Future Plans and Expansion Strategy

LemFi intends to utilize the new funding to enhance its service offerings, expand its network of payment licenses and partnerships to deliver highly localized services, and recruit additional talent to support its next phase of growth. The company currently employs over 300 individuals across Europe, North America, Africa, and Asia.

Adaptability and Scalability

“While navigating the complex regulatory landscape in each market and managing numerous stakeholders remains challenging, our scalability has improved significantly due to our adaptable technology. This technology seamlessly integrates with various payment methods and schemes,” Olalere explained. “Our strategy is to expand into any market with a substantial immigrant population, with a primary focus on Europe this year.”