LemFi moves remittances further into Asia and Europe with $53M in new funding

For many emerging market economies, remittances have become a lifeline. Inflows surpassed $669 billion in 2023, according to World Bank research, and they now represent significant portions of GDP in these countries, often outpacing foreign direct investment as the primary source of foreign exchange. 

Traditional banks and agents maintain a firm grip on the remittance market, with over 60% market share despite fierce competition from new tech challengers. Some of these challengers, like Remitly, have gone public, while others, such as Zepz and Taptap Send, remain privately owned — all vying for the remaining share.

LemFi, the London-based financial services platform designed for immigrants, is one such new player. It’s now armed with $53 million in new funding, which it will use to fuel efforts to acquire more customers and further expand into more countries.

Since its launch in 2020, LemFi has undergone rapid growth by helping diaspora communities in North America and, more recently, Europe, send money to emerging markets across Africa, Asia, and Latin America. The four-year-old fintech boasts over one million active users who rely on its multi-currency accounts to transfer money to friends and family in countries like Nigeria, Kenya, India, China, Pakistan, and 15 others.

Last week, the company expanded into Europe by partnering with embedded finance provider Modulr. This partnership will help LemFi kickstart operations until it secures its license next month after acquiring a Republic of Ireland-based firm. With this move, LemFi—whose revenue comes from transaction fees and foreign exchange spreads—now operates in 27 send-from markets and 20 send-to countries.

One way the company has gained traction is through aggressive fraud detection. One recent report says that people sending money abroad are nearly four times more likely to fall victim to financial fraud than those who don’t.

“Fraud can significantly drive up costs. Higher costs often mean passing them on to customers through additional fees. We’ve managed to keep our fraud rate extremely low, allowing us to offer customers the best possible prices,” LemFi co-founder and CEO Ridwan Olalere, who founded LemFi with CFO Rian Cochran after the duo met at African fintech unicorn OPay, told TechCrunch in an interview.

“So, we’ve built a brand and reputation in certain communities because of that, as well as our user experience, which makes our customers refer it to their friends. That has helped us differentiate and grow even faster than you would expect in such a competitive market.” About 70% of LemFi’s earliest customers still use the platform, while 60% of its customer base is active yearly.

When we reported on LemFi’s expansion into Asia and its broader strategy last April, Olalere revealed that the fintech recorded over $2 billion in annual transaction volume in 2023. Fast forward to now, and the remittance platform is processing half that — $1 billion — in monthly payment volume, Olalere told TechCrunch in a recent interview. He credits this surge to strong adoption in the Asian corridor, which rakes in $160 million in monthly TPV and is growing 30% month-on-month within its first year of launch.

Olalere also shared that the company doubled users, revenue, and transactions over the past two years, and that played a role in attracting investor interest and confidence. This growth momentum led to a Series B round led by Highland Europe, a London-based growth-stage investment firm that backs startups with more than €10 million in annualized revenues.

The round, which, according to Olalere, closed in just four months, also saw participation from existing investors Left Lane Capital, Palm Drive Capital, and Y Combinator and new investors like Endeavor Catalyst, bringing LemFi’s total funding to $85 million.

LemFi will use the funding to extend its offerings, scale its payment network licenses and partnerships to provide hyper-localized service, and recruit talent for its next growth phase. The firm currently has more than 300 employees across Europe, North America, Africa, and Asia.

“While regulations market by market remain complex and we have more stakeholders to deal with, scaling has become a lot easier for us because we have technology that is adaptable and can easily plug and play to different payment methods and schemes,” Olalere noted. “So, we intend to go to as many markets as we have significant number of immigrants, starting now with Europe this year, which is going to be a big focus for us.”