Sending money from the U.S. to Nigeria can be a big challenge. Remittance platforms like Western Union will charge a transfer fee and will only finalise the transaction (money sent from a U.S. debit card to enter a Nigerian bank account) in one to five business days.
Crypto remittance platforms are rising to this challenge, fixing these cross-border payment issues by reducing time and fees.
Afriex is a YC-backed startup, from the Summer 2020 batch, raising a $1.2 million seed round. The company was founded by Tope Alabi and John Obirije in 2019.
Afriex provides instant, zero-fee transfers to Africans at home and in the diaspora. It 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.
Afriex, like other crypto remittance platforms, has built its business on stablecoins — cryptocurrency backed by the dollar. What the company does is that it buys cryptocurrency in one country and sells it in another to offer better exchange rates. This contrasts better-known platforms like Western Union and Wise that use traditional banking systems.
The startup, last year while it graduated from YC, claimed to be processing about $500,000 per month in transaction fees and is used in more than 30 countries. At that time, Afriex was only present in Nigeria and the U.S. Now it has operations in Ghana, Kenya and Uganda, the startup claims to be processing millions of dollars each month. On its website, though, Afriex states that customers can only send money to and from Nigeria, Ghana, Kenya, Canada and the U.S.
Afriex intends to use the new investment to scale up by growing the team and expanding to other markets.
Pan-African VC firm Launch Africa led the seed round. Other investors include Y Combinator, SoftBank Opportunity Fund, Future Africa, Brightstone VC, Processus Capital, Uncommon Ventures, A$AP Capital, Precursor Ventures and Ivernet Holdings. Angel investors like Russell Smith, Mandela Schumacher-Hodge Dixon, Furqan Rydhan and Andrea Vaccari also took part.
Nigeria in focus:
Population: 200.9 million (2019)
GDP: $448.12 billion (2019)
GDP Per Capita: $2,229 (2019)
