For many emerging market economies, remittances have become a lifeline. Inflows exceeded $669 billion in 2023, according to World Bank research, and they now represent significant parts of GDP in these countries, often surpassing foreign direct investment as the main source of foreign exchange.
Traditional banks and brokers maintain a strong grip on the remittance market, with over 60% of the market, despite fierce competition from new technology challengers. Some of these challengers, like Remitly, have gone public, while others, like Zepz and Taptap Send, remain privately owned — all vying for the rest.
LemFi, the London-based financial services platform built for expats, is one such young player. It is now armed with $53 million in new funding, which it will use to fuel efforts to acquire more customers and expand further into more countries.
Since its inception 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 like 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 following the acquisition of a firm based in the Republic of Ireland. With the move, LemFi – whose revenue comes from transaction fees and foreign exchange spreads – now operates in 27 delivery markets and 20 delivery locations.
One way the company has gained traction is through aggressive fraud detection. A recent report says that people who send money abroad are nearly four times more likely to fall victim to financial fraud than those who don’t.
“Fraud can significantly increase costs. Higher costs often mean they are passed on to customers through surcharges. We’ve managed to keep our fraud rate extremely low, allowing us to offer customers the best possible prices,” said LemFi co-founder and CEO Ridwan Olalere, who founded LemFi with CFO Rian Cochran after the duo met African fintech unicorn OPay.TechCrunch in an interview.
“So we’ve built a brand and 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 earliest customers still use 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 – per month in payment volume, Olalere told TechCrunch in a recent interview. He credits this growth to strong adoption in the Asian corridor, which collects $160 million in monthly TPV and is growing 30% month-on-month within the first year of launch.
Olalere also said the company doubled users, revenue and transactions over the past two years and this played a role in attracting investor interest and confidence. This growth spurt 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 saw participation from 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 funds to expand its offerings, scale payment network licenses and partnerships to provide hyper-localized service and recruit talent for the next phase of growth. The firm 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 be easily connected to different methods and schemes payment,” Olalere noted. “So we intend to go into as many markets as we have a significant number of expats, starting now with Europe this year, which will be a big focus for us.”
