Afriex, a Nigerian fintech startup, has raised US$10 million for its blockchain money transfer programme as it aims to overrun competition.
The global cash transfer business is currently dominated by Wise, Western Union and Money Gram, a situation the startup wants to change in Africa.
The startup raised a US$1.3 million seed round in May 2021 and has just closed a US$10 million Series A round at a $60 million valuation.
This app was created by co-founders Tope Alabi and John Obirije.
The financing was co-led by Sequoia Capital China and Dragonfly Capital, with participation from Stellar Foundation, Goldentree and Exceptional Capital, among others.
Tope and Obirije created this money transfer system that utilizes blockchain technology to enable their users to send funds by converting them into stablecoins- cryptocurrencies that peg their interests to an external fiat currency.
Afriex is an application that enables a user to send money from the United States, Canada and United Kingdom to Nigeria, Ghana and Uganda in minutes.
The money transfer programme is linked to local banks; one can deposit money to the app from the bank and withdraw from the app to the bank quickly. The service was created to serve Nigerians but has since expanded into Uganda, Kenya and Ghana.
The advantages of this app over other money transfer programmes are that it is cheaper, does not have hidden charges and can also send money through bitcoin.
The application presents itself as an excellent platform to offer remittances in Africa. World Bank reports that remittance inflows to Sub-Saharan Africa increased by 6.2 per cent to $45 billion in 2021.
Afriex makes money by arbitraging the currency and crypto exchange rates when a customer transacts; it processes over US$5 million in monthly transfers, and has grown its customer base by 500 per cent in the last half year, with half of its active users using the platform more than once a week.
The app can process over US$5 million in monthly transfers. In comparison, Wise company transfers a monthly average of US$5.2 billion.
The Dragonfly Capital managing partner, Haseeb Qureshi, said that he was impressed by Tope Alabi and his startup. As he sat seed round, he wasn’t sure how it would scale after many failed attempts of founders to build crypto businesses targeting the African consumer.
The founders have an ambitious vision for the platform, aside from its current focus as a money transfer product.
Tope hopes to use Afriex to launch a stablecoin and has already inked a partnership with Visa to offer the users of the platform credit and debit cards later this year.
Furthermore, Tope hopes Afriex will be able to give people in Africa a place to store their money that does not fluctuate or get impacted by external forces as much as the current currencies do.
After 20 years in the United States, Tope moved back to Nigeria in 2019 to create something with his accumulated knowledge working at Consensys, a blockchain consultant firm.
Available figures indicate that fintech companies are gaining a lot of traction in Africa.
In 2021, these companies raised more than half of the US$2.2 billion total of venture capital funding across the continent.
“We are building this web3 network of financial institutions that will almost become something like the next Visa,” said Tope.