Afriex, a Nigerian blockchain-enabled money transfer startup that caters to underserved and frequently forgotten consumers in Africa, raised a $1.3 million seed round in May and just concluded a $10 million Series A investment at a valuation of $60 million. Sequoia Capital China and Dragonfly Capital led the financing, which also included participation from Goldentree, Stellar Foundation, and Exceptional Capital.
While Afriex is presently focusing on its primary money transfer services, the business intends to utilize the new capital to develop a stablecoin and has already partnered with Visa to offer credit and debit cards to Afriex users later this year.
Why The Investors Invested
Since its inception, Afriex has gained considerable traction. While Afriex processes over $5 million in weekly transactions, Wise handles an average of £4 billion ($5.2 billion) per month, Afriex has grown its customer base by 500 percent in the previous six months, with half of its active users utilizing the site more than once a week.
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Haseeb Qureshi, managing partner of Dragonfly Capital, says he met Alabi while serving as a mentor at A16z’s crypto business school. Alabi was a member of his team. He claims he was quite impressed by Alabi and Afriex but opted out of the seed round due to concerns about scaling after witnessing other innovators attempt and fail to develop crypto businesses targeting Africa. However, after observing the company’s growth, he concluded that Afriex had cracked the code.
“A big strength of the company is being able to straddle the entire corridor between the U.S. and Africa where many others have tried to succeed and haven’t,” he says. “The reality is that if you want to succeed in emerging markets you need a really strong ground game.”
According to CB Insights, more than $1.4 billion was invested in African fintech startups in 2021, a nearly 7x increase over 2020. Fintech startups raised more than half of the continent’s total venture capital funding of $2.2 billion in 2021. One possible reason these startups are snatching up funding is that they are gaining momentum.
A Look At What The Startup Does
Tope Alabi started Afriex in 2019 after returning to Nigeria after 20 years in the United States. Alabi gained experience while working as a blockchain consultant at Consensys. He and future partner John Obirije began testing a variety of ideas, including a hip hop chat bot and a quiz game, all of which failed. But, after much trial and error, they noticed that they were constantly running into the same issue: trying to pay business expenses for the numerous start-ups with money held in bank accounts in the United States.
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They planned to build a money transfer system that would leverage blockchain to allow users to move money by turning it into stablecoins, which are cryptocurrencies backed by reserve assets. This method makes the transaction free and faster than an existing service such as Wise, which takes a 6.45 percent fee and can take several days to process. They introduced Afriex in 2019, and it quickly gained traction. “From there, things took off,” Alabi tells Forbes. “I’m not sure if it was the pandemic, but we really started increasing quickly.” The service began in Nigeria and has now expanded to Uganda, Kenya, and Ghana.
When a customer transacts, the startup makes money by arbitraging the currency and cryptocurrency exchange rates. Afriex refused to disclose its revenue.
Alabi hopes that Afriex would be able to provide Africans with a location to put their money that does not fluctuate or become influenced by external forces as much as existing currencies do.
“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,” Alabi says. “We are building this web3 mesh of financial institutions that could almost become something like the next Visa.”
Afriex blockchain money transfer Afriex blockchain money transfer
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard. You can book a session and speak with him using the link: https://insightsbyexperts.com/view_expert/charles-rapulu-udoh