Azimo, a mobile money transfer startup out of London that was once feted by Facebook, is jumping into the funding ring with a $20 million raise. CEO and co-founder Michael Kent says the company will use the investment to continue to build out its operations across Europe and deeper into the community of migrants who already form the bedrock of its services.
While Azimo — which was founded in 2012 and covers 200 countries and 80 different currencies –is not disclosing its valuation, we have confirmed with reliable sources that it is just under $100 million.
The Series B round was led by Frog Capital, with participation from MCI Management and existing investors e.ventures and Greycroft Partners. It brings the total raised by Azimo to $31 million.
On the surface, Azimo is similar to other remittance services like WorldRemit and TransferWise — also UK startups, albeit bigger in size and more heavily funded. WorldRemit most recently raised $100 million in February, while TransferWise, which counts Andreessen Horowitz among its backers, bagged a $58 million round in January.
Kent says that part of what sets Azimo apart from these others is less its size but the fact that for now it’s focused mainly on growing its business in Europe and specifically among a demographic that is often neglected by tech services: individuals who are often migrants who may earn less than the average income, and who regularly send a portion of that income far back home to family, with Africa, Latin America, Eastern Europe and parts of Asia “all popular corridors for us.” (Indeed, to raise more awareness about this demographic and the role they play in the $600 billion remittance market, the UN has declared Tuesday “World Family Remittance Day.)
“We run up against a lot of patronizing people when it comes to migrant workiers,” he says. “People assume they wouldn’t use Skype or social networks or smartphones. But in fact we found that Eastern Europeans, Filipinos, and others massively over-indexed on services like VoIP and social networking, so in fact it completely makes sense to sell them digital remittance apps. Rather than requiring them to walk into a Western Union and pay more, you could take the stuff they were using already for other reasons to deliver a cheaper and more cost effective service.” Facebook-based transfers constitutes around 25 percent of all transactions these days, he adds.
As a measure of the typical monetary values that Azimo deals in, Kent tells me that $700 is the average transaction size, and this represents usually between 25 percent and 50 percent of a customer’s take-home pay. “That’s the difference between us and TransferWise or Travelex in a nutshell,” he said. “[Our transactions] are just much smaller.”
Nevertheless, the company plays on economies of scale and lower costs, helped in part by the all-digital money transfer network, to make better returns. That, and a five-fold growth rate (but at values that Kent would not specify), are what attracted investors.
“Global money transfer is a half-trillion dollar market which is rapidly going online, with customers seeing the benefits in speed, cost and convenience. The emergence of native mobile options like Azimo will only intensify this trend,” Frog Capital’s Iyad Omari said in a statement. “We’ve been impressed by Azimo’s growth in the sector and the significant traction they’ve made to date. Digging deeper, we like the retention and advocacy among their customer base.”
Indeed, given how bullish the market is right now for financial startups, $20 million seems like an almost modest amount of funding. Kent points out that he could have raised significantly more, but he says he’s “conservative” when it comes to financing.
Apart from its own organic growth, another reason why Azimo is worth watching is because it has built its business out precisely on the platform — mobile — and in the markets — emerging — where much larger tech companies are also setting their sites.
Kent would not comment directly about what happened with Facebook, but at a time before the social network had launched its own money transfer operations, and it was already honing in on how it would expand in emerging markets, we heard through sources that the social network had been looking to make an acquisition of all or part of Azimo, because while photo sharing may be a killer app in the West, sending money is where it’s at in these other economies.
“If you are trying to get the next two billion users, it’s going to be in the developing world, and there the ability to move funds around is more important than sharing pictures of cats,” he said. “And the thing about us is that this is what we do in the developing world.”