For many emerging market economies, remittances have become a lifeline. Inflows topped $669 billion in 2023, according to World Bank Researchand now account for significant portions of GDP in these countries, often overtaking foreign direct investment as the main source of foreign exchange.
Traditional banks and agents maintain a firm grip on the remittance market, with a market share of more than 60% despite intense competition from new technology competitors. Some of these challengers, like Remitly, have gone public, while others, like Zepz and Taptap Send, remain private — all vying for the remaining stake.
LemFithe London-based financial services platform designed for expats is one such new player. It is now equipped with $53 million in new funding, which it will use to fuel efforts to acquire more customers and expand further into more countries.
Since launching in 2020, LemFi has experienced rapid growth helping diaspora communities in North America and, more recently, Europe, send money to emerging markets across Africa, Asia and Latin America. The four-year-old fintech boasts over a million active users who rely on its multi-currency accounts to transfer money to friends and family in countries including Nigeria, Kenya, India, China, Pakistan and 15 others.
Last week, the company expanded into Europe by partnering with integrated finance provider Modulr. This partnership will help LemFi start operations until it secures its license next month after acquiring a company based in the Republic of Ireland. With the move, LemFi — whose revenue comes from transaction fees and foreign exchange margins — now operates in 27 ship-to markets and 20 ship-to countries.
One way the company has won is through aggressive fraud detection. A recent one report says that those who send money abroad are nearly four times more likely to be victims of financial fraud than those who do not.
“Fraud can increase costs significantly. Higher costs often mean they are passed on to customers through additional charges. We’ve been able to keep our fraud rate extremely low, allowing us to offer customers the best possible prices,” LemFi Co-Founder and CEO Ridwan Olalerewho founded LemFi with CFO Ryan Cochran after the duo met at African fintech unicorn OPay, he told TechCrunch in an interview.
“So we’ve built a brand and a reputation in certain communities because of that, as well as our user experience, which makes our customers refer it to their friends. This has helped us differentiate and grow even faster than you would expect in such a competitive market.” About 70% of LemFi’s first customers are still using the platform, while 60% of its customer base is active annually.
When we reported on LemFi’s expansion into Asia and its broader strategy last April, Olalere revealed that the fintech recorded over $2 billion in annual transaction volume by 2023. Fast forward to now, and the remittance platform is processing half of that — $1 billion — in monthly payment volume, Olalere told TechCrunch in a recent interview. He credits this rise to strong adoption in the Asian corridor, which is earning $160 million in monthly TPV and growing 30% month-on-month in its first year of launch.
Olalere also shared that the company has doubled users, revenue and transactions in the past two years and this has played a role in attracting investor interest and confidence. This growth momentum led to a Series B round led by Highland Europe, a London-based growth-stage investment firm that backs startups with more than €10 million in annual revenue.
The round, which Olalere said closed in just four months, also included existing investors Left Lane Capital, Palm Drive Capital and Y Combinator and new investors such as Endeavor Catalyst, bringing LemFi’s total funding to $85 million.
LemFi will use the funding to expand its offerings, scale its payment network licenses and partnerships to provide hyper-localized services and recruit talent for its next phase of growth. The company currently has more than 300 employees across Europe, North America, Africa and Asia.
“While market-by-market regulations remain complex and we have more stakeholders to deal with, scaling has become much easier for us because we have technology that is adaptable and can easily plug and play across different payment methods and systems,” Olalere noted. . “So we plan to go to markets where we have a significant number of immigrants, starting now with Europe this year, which will be a big focus for us.”
