The unicorns are sprouting up in Seattle.
The latest newly-minted billion-dollar startup in the Emerald City is digital remittance platform Remitly, which just announced an $85 million funding round that pushes its valuation to $1.5 billion.
Earlier this month file data startup Qumulo became a unicorn with a $125 million round. Other Seattle-area companies including Outreach, Auth0, and Convoy passed the $1 valuation mark over the past two years with new investments.
Remitly is the latest to join the exclusive club. Its mobile technology lets people send and receive money across borders, including immigrants in the U.S. and U.K. who support families back home in countries such as the Philippines, India, El Salvador, and others.
The service eliminates forms, codes, agents, and other fees typically associated with the international money transfer process dominated by Western Union, MoneyGram, and other longstanding providers.
Global remittances have been on the rise for the past two decades and account for 5% of the GDP in at least 60 countries, but are expected to drop by 20% this year due to the economic crisis caused by COVID-19. Even so, Remitly saw customer growth spike 200% year-over-year this past May.
People still need to send money overseas — perhaps even more during the pandemic — but many traditional remittance solutions such as brick-and-mortar providers are closed. There are also fears about leaving the home, or that COVID-19 can spread through the exchange of physical currency (there is little evidence of this).
As a result, more users are turning to services such as Remitly or its competitor TransferWise, which is now valued at $5 billion after another round of funding reported this week that included Seattle-based Vulcan Capital.
The investor interest in both companies reflects the growth opportunity for digital remittances, despite the ongoing pandemic.
There is more than $600 billion sent in remittances every year globally, and 60-to-70% is still sent offline, said Remitly CEO Matt Oppenheimer.
Fresh off his Big Tech CEO of the Year win at the GeekWire Awards, Oppenheimer said the company’s new valuation is a reflection of how large Remitly has grown. Its service allows people to move money from nearly 20 “send” countries to nearly 60 “receive” countries. Remitly has served more than three million customers to date and has thousands of bank and cash pickup partners.
Oppenheimer said Remitly’s robust back-end software has helped create trust with customers, particularly those who might be wary of using an online remittance service. He also noted how the pandemic is affecting immigrants — 75% of migrants work in nations where three-quarters of the COVID-19 cases have been reported, the World Economic Forum reported. Immigrant communities are likely to be “among the hardest hit” by the pandemic, The Washington Post reported.
“There is a lot of meaning in what we do,” Oppenheimer said.
Remitly is expanding beyond remittances. Earlier this year the company rolled out a new banking service for immigrants called Passbook.
“The funding helps us continue to grow the remittance business, but it also helps us invest in new products and services,” Oppenheimer said, adding that there is opportunity to “solve a lot of customer pain points.”
TransferWise announced last month that it plans to offer investment products. It’s not clear if Remitly plans to do something similar, or even become its own bank.
Remitly is one of many fintech startups aiming to disrupt decades-old financial processes. TechCrunch reported that total funding to fintech startups dropped in 2019 from $40.8 billion to $34 billion as VC firms look to back later-stage companies.
Remitly, ranked No. 3 on the GeekWire 200 list of top Pacific Northwest tech startups, has more than 1,000 employees across its Seattle HQ and six other offices in Spokane, Wash., London, Cork, Krakow, Manila, and Managua. It has avoided layoffs amid the pandemic and is hiring.
Oppenheimer helped come up with the idea for Remitly while working for Barclays Bank in Kenya. He founded the company in 2011 with Josh Hug and Shivaas Gulati; the original name for the startup was Beamit Mobile.
Prosus’ PayU led the Series F funding round; PayU also led a $115 million investment in 2017. Existing backers DN Capital, Generation Investment Management, Owl Rock Capital, Princeville, Stripes, Threshold Ventures, and Top Tier also invested.
Total funding to date, which includes a $220 million cash infusion from July 2019, is nearly $400 million.
Despite the pandemic, venture capitalists are pouring money into Pacific Northwest tech companies at unprecedented levels, significantly outpacing the number of deals and dollars invested in the first half of 2018 and 2019, according to a recent GeekWire analysis.
A recent survey of 37 chief financial officers from Seattle-based companies indicates that the city’s tech industry remains strong amid the COVID-19 crisis.
