Fintech star WorldRemit just raised $100m. We ask founder Ismail Ahmed about growth

And the business isn’t even five years old

 

It’s another whopping great plume of feathers in the London fintech scene’s already well-adorned cap.

Money transfer service WorldRemit announced today that it’s raised a staggering $100m in Series B funding, led by Technology Crossover Ventures.

That follows the $40m that WorldRemit raised in March last year in a series A round led by Accel Partners, which also participated in this new round.

And WorldRemit isn’t even five years old.

The London-based company was founded in 2010 by Dr Ismail Ahmed, who had previously been a compliance advisor to the United Nations and who has two decades of experience in money transfer, both academic and commercial. He holds a MSc and PhD from the University of London and an Executive MBA from London Business School.

WorldRemit lets users transfer money internationally, and its services span mobile money transfers and digital wallets (meaning you don’t need a bank account to send or receive money).

Today, WorldRemit has more than 150 staff and is available to money-senders in 50 countries. A further 67 countries are able to receive funds, taking its total international presence to 117 countries. The business processes 250,000 transfers every month.

It turned over £5.5m in the year to December 2013, according to accounts visible on Duedil, a 354% increase on the year before.

It has offices in the US, Australia and (as of December 2014) Canada.

We talked to founder and CEO Ismail Ahmed a couple of weeks ago, ahead of today’s announcement, about how he’s grown the business, the future of mobile money and of London’s fintech scene, and how you go about fundraising at this level.

BUSINESS MODEL & THE COMPETITION

Talk me through your business model, in layman’s terms…

WorldRemit enables customers to send money online by several methods, namely cash pick-up, bank transfer, mobile money and airtime top-up.

As an online business, we are able to remove much of the inefficiency and expense associated with the traditional bricks-and-mortar model of money transfers and provide our customers with increased convenience.

Our business model is to charge customers a small fee for each transaction.

How do you manage to offer lower fees than some other remittance services?

Sending money abroad needn’t be expensive. The major companies have been charging high fees simply because they can. They have exclusivity agreements with banks and agents in some countries and there has been a lack of competition in the market.

Is it true you offer digital remittances to twice as many countries as Western Union and MoneyGram? If so, how have you managed to create a larger market than those much more established companies?

Our focus has been digital from day one, so we have been able to establish ourselves as leaders in this area, with customers able to send from 50 countries to over 110 countries.

By contrast, Western Union and MoneyGram have enjoyed a profitable offline existence for many years, so becoming digitally savvy requires a significant strategic adjustment for them.

Source: WorldRemit

ATTRACTING FUNDING & BUSINESS GROWTH

Before raising this fresh $100m, you raised a whopping $40m in March in a Series A round led by Accel Partners. What do you think has been the key to attracting funding?

From working on the UN remittance programme, I had a very clear idea of what the remittance industry needed to do in order to modernise and I think the investors bought into that. I also put my own money into the company to get it started, so they could see that I had faith in its future.

What advice would you give other tech start-ups hoping to attract VC funding?

It’s important for companies to be very honest with potential investors. There is no point in trying to exaggerate positive aspects of your business or sugar-coat any shortcomings. Being completely up-front means there will be no surprises further down the line.

What do you think has been key to unlocking your growth in recent years? Have you always been doing the same thing and growing steadily, and was there a certain light-bulb moment or a pivot you tried that truly unlocked the business model?

At WorldRemit, we’ve prioritised the development of mobile money services, which will be an ever-larger piece of the remittance universe. As such, we are well positioned for future developments in the sector. The investment from Accel [in March 2014] helped us, especially because we could hire a lot more talent very quickly.

There are now more than 100 people working for WorldRemit, with the team having grown three-fold in the past year. What have been your most important lessons about attracting talent and building a team?

Getting the culture fit is vital; genuine creativity and the ability to work collaboratively are success factors at WorldRemit, so we attract people who enjoy working in that kind of environment. It also helps that we already have some amazing talent working for us and new recruits recognise this. We want to foster an entrepreneurial culture here – people work hard because at the end of the day we are all pulling in the same direction.

Talking strategy in the WorldRemit office

Team-talk in the WorldRemit office

What about your key lessons for managing and structuring business growth?

In addition to making the most of current opportunities, it’s important to look over the horizon and try to anticipate the changes that are likely to affect the industry.

We saw the impact mobile money would have on money transfers and made it an integral part of our business. We are constantly on the lookout for the next thing we can integrate to make our company even better.

You set up an office in Colorado in November. What’s the thinking behind that? Why Colorado rather than California?

The reason we chose Colorado rather than California is that Denver has a depth of money transfer talent that makes it more relevant to us than Silicon Valley. The local authority went out of their way to accommodate us and make the city an attractive place to locate our US headquarters, which has improved the process.  

Talk me through the impact the mobile money revolution has had on your business…

mobile money is at the heart of our business and we are now the global leader in this area, enabling customers to send money to 26 mobile money services worldwide. Our African customers are already sending more than 50% of all transfers to mobile money or mobile airtime.

In the UK, it’s common to have a bank account. In so-called “developing” economies, far less so – but mobile money services have unlocked the economic potential of many people who do not have access to bank accounts. How do you think this might change the economic landscape of these countries (and indeed the world)?

The rise of mobile money has been a key factor in extending financial services to the unbanked – especially in Africa. Last year, by a conservative estimate, there were 60 million active mobile money users. The year before it was only 30 million, so the carriers are clearly working hard to build their services. Out of the 2.5 billion unbanked people in the world, one billion already have a mobile phone. That’s a huge potential group of new recipients.

WorldRemit desk

What’s the ultimate ambition? How big do you think WorldRemit could grow?

Ultimately, we want to create the complete modern money transfer business – a service with the reach of Western Union, but with the lower fees and higher compliance values that an online business can deliver.

Could your model be applied to any other industries or sector, or will you stick to remittance?

Many other business areas, such as travel, music and shopping went online a long time ago. Banking and financial services have been slow to adapt to new technologies, so we are proud to play our part in helping this area catch up with other industries. Our aim is to continue growing the business in order to make a difference in customers’ lives.

LONDON’S FINTECH SCENE

London’s fintech scene is booming – arguably the world leader. Do you think London can retain that position?

As a twin centre of financial services and technology, London gives fintech entrepreneurs access to a pool of talent that other places are unable to match. Other factors, such as the language, the time zone and the city’s international outlook also make it the ideal place to start a fintech company.

What threats does London’s fintech scene face, and what support or resources does it need to overcome them and remain internationally competitive?

The US is far and away the biggest market for remittances, so, in order to become global players, London’s firms will need to become established there and this is a time-consuming process, given the US’s state-by-state licencing system. Also, the UK government should aim to incentivise innovation as much as possible and create the legal and policy framework that enables innovation to thrive.

 

 

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