LemFi, a fast-growing digital remittance startup that has raised over $60 million, has expanded to Europe.
“LemFi is officially LIVE in Europe! Nigerians in Europe can now send money home with LemFi,” the company told customers on Wednesday, January 8, 2024. “Your family and friends in Europe, especially Italy, France and Spain, can now enjoy quick and direct transfers home at the best rates with zero transfer fees.”
According to the startup’s terms of service, the European launch is in partnership with Modulr Finance B.V. Founded in 2015, Modulr is an embedded payment provider with deep UK and European roots. It has a European e-money issuer licence from the Netherlands which it has passported across the European Economic Area (EEA). This allows LemFi to go live in multiple European countries at once if it chooses to.
Remittance often refers to money sent back home by migrants. Thus, it’s safe to say remittance is a function of migration. In a remittance transaction, there are two countries, a send market and a receive market. As a remittance business, if you follow where the workers migrate to and from, you can map your send and receive markets. This is what LemFi has done.
According to the UN, Africa, Asia, Latin America and the Caribbean have emerged as receiver markets over the last 30 years. This is because most migrants emigrate from those continents in search of greener pastures. Europe, Northern America and Oceania are sending markets as most emigrants settle there and remit money home. For instance, about 10% of the people in Europe are immigrants, compared to Africa’s 1%.
That said, some countries in Europe and Asia double as sender and receiver markets for millions of migrants.
List of regions in the World Bank’s LMIC grouping
East Asia and Pacific, Europe and Central Asia, Latin America and Caribbean, Middle East and North Africa, South Asia, and Sub-Saharan Africa.
In the last decade, these low- and middle-income countries (LMIC) accounted for 75% of global remittance inflows. The World Bank estimates the total official remittance to LMICs in 2024 to be $685 billion, a 5.8% growth over 2023.
LemFi’s methodical growth in markets, funding and licensing
LemFi, founded by an African and a European in 2020, has pursued an aggressive strategy to build its send-and-receive remittance network. The startup which now has over a million users started with Canada, as its first send market, where it secured the readily obtainable MSB licence while Nigeria, a top 10 recipient of global remittance, was its first receiver market.
In 2021, the company announced a pre-seed of $725,000. At the time, it had the UK on its list of prospective send markets and Ghana, as a receive market.
According to Crunchbase data, LemFi raised a seed in July 2022. Before the end of that year, it acquired a UK e-money issuer, RightCard Payment Services Limited for $2.5 million. The licence allowed it to partner with ClearBank, a UK and recently-licensed European bank. The LemFi and ClearBank partnership allowed the former to issue accounts to UK customers and hold funds on LemFi’s app.
In February 2023, LemFi added seven new receive markets in Africa to its remittance network: Senegal, Ivory Coast, Benin Republic, Cameroon, Tanzania, Rwanda, and Uganda. In June 2023, it added Kenya to its receive market. Thus, when you add Nigeria and Ghana, LemFi reached 10 destination markets. In July 2023, LemFi secured its IMTO licence for inbound remittance to Nigeria.
In August 2023, it announced its expansion to the US, a key sender market, and a $33 million Series A round.
Launching in the US is a big milestone for remittance companies. The same UN report on World Migration shows that over the last three decades, the US has retained its spot as the number one country for migrants. As of 2020, immigrants in the US represented 13% of the country’s total population. So, by default, the US is a key send market of remittance. For instance, the US accounts for over 20% of remittances to Nigeria, making it the country’s biggest remittance source.
In 2023, the company processed $2 billion in annual transaction volume, assuming a net take rate of 1% that’s a revenue of $20 million. The CEO, Ridwan O. Akangbe told TechCrunch that it is profitable and that three in five of its users are monthly actives.
More countries and products for LemFi
Beyond a focus on the African diaspora, LemFi is now executing a plan to win over the Asian diaspora.
“…we’ve realized that remittances across so many regions are more similar than people think,” said Ridwan. The problems that Africans face in terms of difficulty in sending money and compliance issues are very similar to what people from different emerging markets also face.”
With the US move, in place, the country has gone after India, China and Pakistan as destination markets. Those three countries are among the top five recipients of remittance everywhere in the world. India, for example, received an estimated $129 billion in 2024. That figure is six times more than Nigeria’s $19.8 billion.
To enter those foreign markets, the company hired key personnel from companies like Terrapay—the global payouts company, Foodpanda—a DeliveryHero subsidiary and OPay.
“The markets we serve will continue to need millions of immigrants yearly, so we want to be one of the first products introduced to the African, Indian, Chinese, or Pakistani communities,” remarked Philip Daniel, the company’s global expansion lead in a recent interview. “There are still ample opportunities for us to grow.”
One of those “products” is a card coming soon to its customers in the US, the UK and Canada.
Editor’s note, 8:10AM, Jan. 9, 2024: We removed some of the extra details from this story.
