Investors 'double down' on Remitly, driving value to $1.5B as coronavirus propels mobile remittances
Remitly has raised $85 million in its latest fundraising round, valuing the company at $1.5 billion as the COVID-19 pandemic drives consumers to increasingly send remittances digitally.
The Series F fundraising round, which was led by existing investor PayU, an e-commerce payment and fintech services provider, raised $85 million and valued Remitly at $1.5 billion. PayU was joined by returning investors General Investment Management, Owl Rock Capital, Stripes (formerly known as Stripes Group and no relation to the payment fintech named Stripe), DN Capital, Top Tier, Princeville Global and Threshold Ventures. Remitly’s Series F round has been signed by all parties and will be closed pending regulatory approval.
“We have spent [close to] $1 billion in M&A and partnerships in the last four years,” said Laurent le Moal, CEO of PayU. “We have been an investor in Remitly for some time now and on its board for the last three. We aren’t in the remittances business, but Remitly sends money to customers in the developing regions we serve. They are mobile first, specializing in digital remittances with a mission to help immigrants and their families. If you believe in Remitly’s story, and we do, then this is the time to ‘double down’ on your investment in them and we did that.”
PayU is a European-based payment services provider with a wide coverage across Asia, Africa, Eastern Europe and Latin America, along with a few U.S. investments. It acquired Singapore-based Red Dot Payment in July 2019 to expand in Asia, invested in PaySense (an Indian digital credit platform) and acquired two U.S. businesses, Zooz in 2018 and Wimbo in 2019. PayU is a unit of publicly traded global technology group, Prosus N.V., which in turn is a subsidiary of South African-based Naspers. In addition to Prosus, Naspers is the largest shareholder of Tencent Holdings, famous for the WeChat app and WeChat Pay, with a 31.2% stake. In 2018, Naspers sold 2% of its Tencent position for $10 billion, according to The Wall Street Journal.
The continued investment by PayU and its fellow investors represents a validation that as COVID-19 has pushed consumers away from sending remittances through physical agent locations to using mobile apps and online services that the potential shift is likely to be permanent once the pandemics subsides.
In an earlier interview about Remitly, Richard Crone, principal of Crone Consulting, said: “If there’s a question that this shift could be temporary, it’s important to remember that it only takes 66 days to change any habitual behavior and I think we’ve reached that point.”
Remitly has been adding new customers at a growth rate of 200% year-over-year, as its target consumer group of immigrants has been flocking to its mobile app. The COVID-19 pandemic has forced many remittance senders to shift to digital channels as they have faced physical agent store closures, city and state shelter-in-place lockdowns and general fears of going to a store to conduct transactions. It’s also a growth story that stands in contrast to the remittance market in general, which the World Bank estimates will shrink by 20% in 2020 due to the pandemic.
“This is a once in a lifetime industry opportunity brought on by the global pandemic,” said Matt Oppenheimer, co-founder and CEO of Remitly. “It can take years to get people to trust your financial brand for them to shift over and use your services. The pandemic has changed all of that as we are seeing five years of shift happening in months. We laid the foundation to build trust through a transparent service and digital experience. Customers are coming to us because of this. We see this additional investment as fuel to continue our growth trajectory.”
Oppenheimer stated that the new investments will allow Remitly to expand its products and the features it offers through its mobile app as well as the infrastructure it supports in receiving countries. Currently Remitly can send money from almost 20 countries and be received in almost 60 countries. It has served over three million customers.
Remitly currently serves several major remittance corridors and its customers can receive in most of the top remittance receiving countries including India, Mexico and the Philippines, among others. Recipients of its remittances can pick up cash at over 200,000 locations, have the funds brought to their homes in select markets or have the monies loaded into their bank accounts or mobile wallets.
In May, Remitly launched a cash deposit service for its digital bank account holders on the Green Dot retailer network. In February, Remitly introduced Passbook, which is a U.S. bank account specifically designed for immigrants. Remitly partnered with Sunrise Banks of Minnesota to offer the Passbook product.
According to Crunchbase, a website that tracks investments in private companies, Remitly has raised over $420 million in debt and equity funding over 11 rounds, excluding the current Series F round. Additional notable investors in Remitly include QED Investors, Silicon Valley Bank, Barclays, Goldman Sachs and Bezos Expeditions, the personal venture capital business of Amazon CEO Jeff Bezos.
“It’s important to recognize the $1.5 billion valuation as a milestone, but it’s really just a starting line for us,” added Oppenheimer. “It reminds me that we still have a lot to do in order to carry out our mission which is to help improve the lives of hundreds of millions of global immigrants and their families. I believe a big part in achieving that mission is by delivering financial products geared to their needs through the mobile channel.”