But in 2011, Chris DeVore was ready to make a bet. The early-stage tech investor liked the founders and how they were thinking about building a business.
In one of Remitly’s initial pitch meetings, the co-founders showed off their test framework. It was baked in an Excel spreadsheet that had 100 hypotheses and what results would validate or invalidate each scenario.
“It was incredibly rigorous and fast. They asked the right questions; they used efficient methods to get answers,” DeVore recalled, speaking at an event in Seattle on Wednesday. “That gave investors the confidence, before they could even ship anything, that this was a team with a deep understanding and a great process to figure out how to create success.”
Remitly has come a long way since then. The Seattle startup announced a $220 million cash infusion this week that included a $135 million equity round and a $85 million credit facility. The mobile remittance service is now valued at just under $1 billion and approaching an elite group of Seattle-area “unicorn” companies.
DeVore, general partner at Founders’ Co-op, and Matt Oppenheimer, co-founder and CEO of Remitly, spoke at the inaugural Founder & Funder Series event at The Riveter on Tuesday.
They shared startup advice and recounted Remitly’s journey, which included a 3-month stint as part of the second-ever Techstars Seattle cohort when the company was known as Beamit Mobile. DeVore, a Techstars director at the time, said he was drawn to Oppenheimer and his co-founders based on what he saw during those early meetings.
“Does the team not only have the know-how, but are they also learning machines?” DeVore said in regard to assessing nascent startups. “Are they going to learn and iterate on their work faster than anyone else with greater fidelity? Revenue or customers goals — those are artificial goalposts that investors might set for you. But they don’t really care about that. They care about the muscle you are building to hit those goals in general.”
Remitly had that “fail fast” mentality in its DNA. In fact, the initial idea for Remitly was not a remittance service itself, but a search engine to find remittance services. Market research showed that there wasn’t a viable business model.
“Try to test hypotheses very early with customers,” Oppenheimer advised the crowd.
Not everyone wanted to put money behind Remitly. But Oppenheimer learned that it was important to seek advice from those who passed on investing.
“The ones that give you good feedback — keep those relationships alive so you can go back to them in a future round,” he said. That’s what happened with QED Investors, the firm led by Capital One co-founder Nigel Morris, which passed on the seed round but led Remitly’s Series A investment.
Both Oppenheimer and DeVore agreed that entrepreneurs should consider alternate funding mechanisms other than venture capital. “VC is the wrong tool for most business financing jobs, yet it’s the tool everyone assumes they should pursue,” said DeVore, who will step down as Techstars Seattle managing director this month. “The No. 1 favor you can do as a founder is to find out if your business is a good fit for VC.”
Oppenheimer, who helped come up with the idea for Remitly while working for Barclays Bank in Kenya, advised entrepreneurs to establish culture and values early. He also said that co-founders and top execs must appreciate the different skill sets each brings to the table. And they should “have each others backs,” he said.
That value showed when Oppenheimer went to India and camped outside an immigration office in New Delhi so that his co-founder Shivaas Gulati could come back to the U.S.
“There will be challenges,” Oppenheimer said. “If everyone knows that you have each other’s back, that’s really important.”
Remitly uses mobile technology to help people send and receive money across borders, including immigrants who support families back home. It is an extremely hot sector of the financial tech market. Two other rivals — TransferWise and WorldRemit — just raised their own $100 million-plus investment rounds in recent months.
Remitly employs 200 people at its Seattle HQ and another 800-plus at additional offices in London, Manila, and Managua. The company is considered a leader in Seattle’s emerging fintech industry.
One audience member asked about Seattle’s future as an epicenter for fintech startups, referencing an earlier GeekWire story on the topic. Oppenheimer said the technical talent clearly exists, but less so on the financial services experience side.
But he added that Remitly has hired only a handful of product-related employees from the traditional finance industry. “We want our product folks to be rethinking how it’s done, not leveraging what’s been done in the past,” he said.
Oppenheimer added: “Seattle has a real shot at being a fintech hub.”