Fintech startup, Afriex has closed a $10 million Series A round to expand its blockchain money transfer platform. The company, which is valued at $60 million runs a money transfer system that utilises blockchain to enable users to send funds by converting them into stablecoins, which are cryptocurrencies backed by reserve assets.
This process makes the transaction free and quicker than an existing service like Wise which charges a 6.45% fee and can take a few days to process.
Launched in 2019, the startup founded by Tope Alabi and John Obirije had raised a $1.3 million seed round last May. The latest funding round was financed by Sequoia Capital China and Dragonfly Capital with participation from Goldentree, Stellar Foundation, and Exceptional Capital, among others.
Afriex launched amongst an explosion of fintech companies targeting underserved and often overlooked, consumers in Africa. Data from CB Insights found that more than $1.4 billion was invested into African fintech companies in 2021, a nearly 7x increase over 2020.
Fintech companies raised more than half of the $2.2 billion total of venture capital funding across the continent in 2021. One possible reason these companies are gobbling up capital that they are seeing strong traction.
Afriex processes more than $5 million in monthly transfers, Wise moves an average of £4 billion ($5.2 billion) a month for comparison, but Afriex has grown its customer base by 500% in the last six months with half of its active users using the platform more than once a week.
The startup makes money by arbitraging the currency and crypto exchange rates when a customer transacts. Afriex declined to share its revenue.
While hoping that Afriex will be able to give people in Africa a place to store their money that doesn’t fluctuate or get impacted by external forces as much as the current currencies do, Alabi says: “Because we are building this network of connected financial institutions, we have built on-ramps for local Nigerian banks and on-ramps for local currency exchanges. We are building this web3 mesh of financial institutions that could almost become something like the next Visa.”
Dragonfly Capital managing partner, one of the investing companies, Haseeb Qureshi, says: “A big strength of Afriex is being able to straddle the entire corridor between the U.S. and Africa where many others have tried to succeed and haven’t. The reality is that if you want to succeed in emerging markets you need a really strong ground game.”