Remittances start-up WorldRemit has raised $45 million in debt to help it tap the business of using mobile wallets to send money across emerging markets.
The investment has come from TriplePoint Venture Growth BDC Corp and Silicon Valley Bank, bringing the total amount of money raised to date to $192.7 million. Other investors include Accel and TCV.
London-based WorldRemit allows users to send money abroad from a mobile device or computer with people on the other end being able to receive it in their bank accounts, by cash, to a mobile wallet or as a mobile airtime top-up. The service touts its cheaper fees and ability to transfer money instantly as the reason behind why it is able to challenge established rivals like Western Union.
International migrants will send $601 billion to their families in other countries this year, with developing countries receiving $441 billion of that, according to the World Bank. WorldRemit is trying to become the dominant player in that market. The financial technology or fintech space is heating up. WorldRemit's closest rival is perhaps TransferWise which claims to allow cheaper international money transfers than the banks. In January 2015, TransferWise announced it had received $58 million in funding, led by Andreessen Horowitz, the Californian venture capital group that has backed companies like Facebook.
‘2 billion under-banked’
While the service allows people to send money from the WorldRemit app to a bank account, many people in emerging markets do not have bank accounts but they do have feature phones. On these devices are so called "mobile wallets", essentially banking services that can be done via simple text messages. Users can transfer money, pay bills and even take out credit.
WorldRemit has recently partnered with African mobile telecoms company MTN Group so users of the remittances service can send money to MTN mobile wallets in Rwanda, Uganda and Zambia. The chief executive of the start-up said the money raised will go towards growing the number of mobile wallets that are supported.
"It's to provide the next phase of growth and specifically to further expand distribution network in the area of mobile money services. Of the 264 mobile money services, we have about 25 of those and we want to get to the remaining," Ismail Ahmed, founder and CEO of WorldRemit, told CNBC by phone.
"Two billion people are under-banked in the emerging economies and they are our customers. When we send money today to different countries often the recipient has to travel long distance to go to a location where they can get cash. Mobile money services are making it so anybody who has a basic feature phone can set up an account and the mobile number becomes the account number."
Approaching ‘breakeven’
The company has certainly seen rapid growth. Revenues in 2014 were £15 million in 2014, rising 80 percent to £27 million in 2015. However, WorldRemit made a loss of over £10 million in 2014, widening significantly from the £1.9 million loss the year before. The latest results are not available yet.
But Ahmed said that this year the company will continue its "fast growth" and will get near to becoming breakeven.
"What I can say for sure that in 2016, we are not yet breakeven, but we will get closer to breakeven in 2016," Ahmed told CNBC.
