Nigerian start-up Afriex raises $1.2 million to scale its platform across Africa
Sending money from the U.S. to Nigeria can be a painstaking process. For remittance platforms like Western Union, it will cost a transfer fee and take between one to five business days for money sent from a U.S. debit card to enter a Nigerian bank account.
Crypto remittance platforms are rising to the challenge of fixing these cross-border payment issues by reducing time and fees.
Nigerian fintech firms like Flux and Afriex are solving this problem. Afriex is raising a $1.2 million seed funding, a form of securities offering in which an investor invests capital in a startup company in exchange for an equity stake or convertible note stake in the company.
The company founded by Tope Alabi and John Obirije in 2019 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.
Like other crypto remittance platforms, Afriex has built its business on stablecoins -- cryptocurrency backed by the dollar. In essence, the company buys cryptocurrency in one country and sells it in another to offer better exchange rates. This is in contrast to better-known platforms like Western Union and Wise that use traditional banking systems.
Last year, the startup claimed to be processing about $500,000 per month in transaction fees and is used in more than 30 countries.
At the time, Afriex was only present in Nigeria and the U.S. But having started operations in Ghana, Kenya and Uganda, Afriex claims to be processing millions of dollars each month. On its website, though, Afriex states that customers can only send money to and from Nigeria, Ghana, Kenya, Canada and the U.S.
With the new investment, the Lagos and San Francisco-based startup is looking to scale up by growing the team and expanding to other markets.
Pan-African VC firm Launch Africa led the seed round. Other investors include Y Combinator, SoftBank Opportunity Fund, Future Africa, Brightstone VC, Processus Capital, Uncommon Ventures, A$AP Capital, Precursor Ventures and Ivernet Holdings. Angel investors like Russell Smith, Mandela Schumacher-Hodge Dixon, Furqan Rydhan and Andrea Vaccari also took part.
The SoftBank Opportunity Fund, a subsidiary of the SoftBank Group, targets founders of color in the U.S. running early-stage startups. Since launching in June 2020, it has invested in 22 startups and Afriex seems to be the only one catering to a set of users in the U.S. and another continent.