Several reports have shared just how difficult it is to send money overseas, but when the destination is Africa it can be an even bigger burden to deal with limited options, transfer fees and extended processing periods.
To help resolve this issue, Lagos and San Francisco-based fintech startup Afriex — a Summer 2020 Y Combinator-backed company — launched a digital payments platform to provide instant, zero-fee money transfers to Africans at home and in the diaspora.
Today, it announced a raise of a $1.2 million seed round to continue scaling its platform across the African continent, according to TechCrunch.
The round was led by Pan-African VC firm Launch Africa, with participation from other investors such as Y Combinator, SoftBank Opportunity Fund, Future Africa, Brightstone VC, Processus Capital, Uncommon Ventures, A$AP Capital, Precursor Ventures, and Ivernet Holdings. Angel investors for the round included Russell Smith, Mandela Schumacher-Hodge Dixon, Furqan Rydhan, and Andrea Vaccari.
With its newest investment, Afriex looks to scale up its business model by expanding both its team and outward to other markets.
The company — which was founded by Tope Alabi and John Obirije back in 2019 — built its platform on cryptocurrency which allows its app users to “deposit cash on the app, send money to a bank account or another user, and withdraw money to a connected bank or debit card,” according to TechCrunch.
Afriex currently operates within Ghana, Kenya, and Uganda, processing millions of dollars each month, Afriex shares. For now, customers can only send money to and from Nigeria, Ghana, Kenya, Canada, and the United States.
TechCrunch reports that co-founder Alabi observed the difficulties that came with sending money to Nigeria from his upbringing, so he used his experience as a blockchain developer at Consensys to find a resolution for the problem.
“We would go back home every two years and even then, I would always take note of what was missing and what could be improved. I would find myself having to pay for foreign expenses with money that was sitting in a US bank account,” Alabi shared. “Traditional remittance companies were so slow and expensive that I knew I could do it better with crypto. Remittance is the best and most important use case for crypto. Our goal is to build the world’s largest remittance company, starting with emerging markets.”
Overall, the startup’s goal now is to introduce its payments system to Africa as a whole in order to reach the same level of prominence of platforms like Western Union and Wise.
For more information about Afriex, visit its website.