Y Combinator-backed fintech startup Afriex has raised a seed funding round worth US$1.2 million as it bids to scale its payments and remittances platform across Africa.
Founded in late-2019, Afriex provides instant, zero-fee transfers to Africans at home and in the diaspora. The startup’s platform allows users to deposit cash on the app, send money to a bank account or another user, and withdraw money to a connected bank or debit card.
Sending money overseas is still slow and expensive. Afriex fixes this by buying cryptocurrency in one country and selling it in another to offer better exchange rates and faster transfers than banks or other transfer services.
Based in the United States and Nigeria, the platform is already processing millions of dollars in payments each month for thousands of Africans in the diaspora and on the continent, and grew 20X in 2020. It is now set for even quicker growth after securing its US$1.2 million seed funding round after taking part in Y Combinator’s Summer 2020 Cohort.
The round includes Y Combinator, was led by Launch Africa, and also includes the SoftBank Opportunity Fund, as well as Future Africa, Brightstone VC, Russell Smith, Mandela Dixon, Processus Capital, Uncommon Ventures, A$AP Capital, Furquan Rydhan, Precursor Ventures, Ivernet Holdings, and Andrea Vaccari.
Initially active only in the US and Nigeria, Afriex has now started operations in three new countries, namely Ghana, Kenya, and Uganda, and will use the investment to grow its team and expand into further new markets, speeding its vision to be the fastest, cheapest way to send money to anyone in the world.
Founder and chief executive officer (CEO) Temitope Alabi said it had always been his dream as an immigrant child growing up in the US to be able to make an impact at scale.
“We would go back home every two years and even then I would always take note of what was missing and what could be improved,” he said.
Back in the US, Alabi went on to study engineering at the University of North Texas, before working for companies such as Wix, IDEO and Consensys as a software engineer. At the latter, the largest blockchain development firm in the world that was founded by one of the co-founders of Ethereum, he would often have to travel to other countries to give talks on blockchain.
“I would find myself having to pay for foreign expenses with money that was sitting in a US bank account. Traditional remittance companies were so slow and expensive that I knew I could do it better with crypto,” said Alabi.
“Remittance is the best and most important use case for crypto. Our goal is to build the world’s largest remittance company starting with emerging markets.”
Whereas the likes of Western Union and Transferwise (now Wise) built their businesses on top of the traditional banking system, Afriex uses stablecoins – cryptocurrency backed by the US dollar. This means it can charge lower fees, and transfer funds faster, in minutes as opposed to days.
“We don’t have to hold inflationary currencies – we can just hold USD and crypto allows us to source better exchange rates,” Alabi said.