Murad Ahmed, European Technology Correspondent – WorldRemit has raised $100m from a leading Silicon Valley investor in one of the largest fundraising rounds for a British technology start-up, valuing the company at $500m.
Technology Crossover Ventures (TCV), an early backer of Facebook and Netflix, has invested in the online money transfer group that is one of London’s leading new “fintech” businesses. It values the company at about $500m, according to people familiar with the matter.
The deal is another illustration of the attractiveness of the UK capital’s financial technology groups as these British groups prepare moves into the US market.
In January, TransferWise, a rival London-based money transfer company, announced it had received $58m in funding, led by Andreessen Horowitz, the Californian venture capital group that has previously backed Facebook, Airbnb and Twitter. Last year, Funding Circle, the British peer-to-peer lender, raised $65m in a funding round that included the US tech investors Union Square Ventures and Ribbit Capital.
As with TransferWise and Funding Circle, WorldRemit said the new money will allow it to expand internationally. The company has recently opened offices in Denver, Colorado where it aims to employ more than 200 people, with plans to be fully licensed across the country by the end of this year.
“The US is a big part of our expansion plan and that is now happening,” said Ismail Ahmed, the Somali-born founder and chief executive of WorldRemit, who was previously a remittances expert at the UN. “This funding will certainly fuel our growth in the US.”
WorldRemit is trying to grab a share of the $529bn in remittances that zip around the world each year, according to estimates from the World Bank. However, online remittances could become a multibillion dollar opportunity, as internet transfers accounts for about 5 per cent of the overall remittances market. WorldRemit allows people to send money from 50 countries and receive cash in 117 nations.
The company will face stiff opposition across the Atlantic, battling incumbents such as Western Union and MoneyGram, as well as Xoom, a major US online remittances market, which has a market capitalisation of over $600m.
There have also been concerns that online remittance groups will struggle to turn a profit as they have to spend so much in marketing to gain customers from established players.
WorldRemit is unprofitable, though the company has said that its revenues tripled in 2014 to £15.2m, and expects similar growth this year. Last year, it raised $40m from Accel Partners, the venture capital firm, bolstering its balance sheet as it invests heavily in its expansion plans.
“The key difference for us is that we’re a totally global service,” said Mr Ahmed. “None of the other online players have a truly global footprint. That enables us do our marketing differently to a company that is focused on one country. But we also have partnerships with [telecoms companies], which have millions of customers . . . which allows us to acquire customers.”
Source: http://www.ft.com
