Sending cash from the U.S. to Nigeria generally is a painstaking course of. For remittance platforms like Western Union, it is going to value a switch price and take between one to 5 enterprise days for cash despatched from a U.S. debit card to enter a Nigerian checking account.
Crypto remittance platforms are rising to the problem of fixing these cross-border fee points by decreasing time and costs. Simply yesterday, we talked about Flux, a Nigerian fintech fixing this downside within the current YC W2021 batch. At the moment, one other YC-backed startup, Afriex — however from the Summer season 2020 batch — is elevating a $1.2 million seed spherical.
The corporate based by Tope Alabi and John Obirije in 2019 gives prompt, zero-fee transfers to Africans at dwelling and within the diaspora. It permits customers to deposit money on the app, ship cash to a checking account or one other consumer and withdraw cash to a linked financial institution or debit card.
Like different crypto remittance platforms, Afriex has constructed its enterprise on stablecoins — cryptocurrency backed by the greenback. In essence, the corporate buys cryptocurrency in a single nation and sells it in one other to supply higher trade charges. That is in distinction to better-known platforms like Western Union and Sensible that use conventional banking programs.
Final yr whereas the startup graduated from YC, it claimed to be processing about $500,000 per thirty days in transaction charges and is used in additional than 30 international locations. On the time, Afriex was solely current in Nigeria and the U.S. However having began operations in Ghana, Kenya and Uganda, Afriex claims to be processing hundreds of thousands of {dollars} every month. On its web site, although, Afriex states that prospects can solely ship cash to and from Nigeria, Ghana, Kenya, Canada and the U.S.
With the brand new funding, the Lagos and San Francisco-based startup is trying to scale up by rising the group and increasing to different markets.
Pan-African VC agency Launch Africa led the seed spherical. Different traders embody Y Combinator, SoftBank Alternative Fund, Future Africa, Brightstone VC, Processus Capital, Unusual Ventures, A$AP Capital, Precursor Ventures and Ivernet Holdings. Angel traders like Russell Smith, Mandela Schumacher-Hodge Dixon, Furqan Rydhan and Andrea Vaccari additionally took half.
The SoftBank Opportunity Fund, a subsidiary of the SoftBank Group, targets founders of coloration within the U.S. working early-stage startups. Since launching in June 2020, it has invested in 22 startups and Afriex appears to be the one one catering to a set of customers within the U.S. and one other continent.
This is because of Alabi’s upbringing as an immigrant baby who has had a mixture of each worlds. It was tough to ship cash to Nigeria and his expertise as a blockchain developer at Consensys made him understand he might remedy an issue.
“We might return dwelling each two years and even then, I’d at all times pay attention to what was lacking and what might be improved. I’d discover myself having to pay for overseas bills with cash that was sitting in a U.S. checking account,” mentioned Alabi. “Conventional remittance firms had been so gradual and costly that I knew I might do it higher with crypto. Remittance is one of the best and most essential use case for crypto. Our aim is to construct the world’s largest remittance firm, beginning with rising markets.”
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