Nala, a remittance startup that is expanding its portfolio through a new B2B payments platform, has raised $40 million in capital in an unusual deal that marks one of Africa's largest Series A deals.
The oversubscribed round was led by San Francisco-based venture capital firm Acrew Capital, with participation from existing investors including DST Global, Norrsken22, HOF Capital, Amplo and NYCA Partners. A number of angel investors also contributed, including fintech founders Chime's Ryan King and Robinhood's Vlad Tenev.
Nala founder and CEO Benjamin Fernandez told TechCrunch that the new capital infusion, which follows a $10 million seed round in 2022, will fuel the company's global growth plans, which include expanding its remittance business into Asian and Latin American markets.
Currently, through its consumer app, Nala enables people in the EU, UK and US to send money to 249 banks and 26 mobile money services in 11 markets across Africa. Where Nala is integrated with mobile money services, such as M-Pesa in Kenya, senders can pay bills directly into their local mobile wallets.
Fernandes said the decision to add payments features was driven by users' desire for 360-degree control over their finances, and the fintech plans to expand these services to new markets it plans to launch, starting with Asia.
Nara is also focusing on its B2B payments platform, which it launched in March to serve global companies making payments to and from Africa.
“This $40 million funding marks a pivotal moment for Nara – it will enable us to go beyond remittances, expand our reach beyond Africa and build a strong payments ecosystem. We will reinvest this money to strengthen our infrastructure and provide reliable, low-cost payments for all. With the launch of our own payments rails and the expansion of our B2B platform Rafiki, we're not just talking change, we're building change. We have bold and ambitious plans, so be sure to stick with us for the next few years,” Fernandes said.
Fernandes launched Nala in 2017 to provide remittance services within Tanzania, but pivoted in 2021 to enable international transfers.
The startup's new B2B platform, Rafiki, is also powering Nala's consumer app. Fernandez told TechCrunch in a previous interview that the company decided to build the payments platform to ensure the reliability of its remittance services and serve global businesses looking for a trusted service.
Nala says that through Rafiki's direct integration with banks and mobile money providers, it can guarantee the availability of its consumer services, and that its proprietary payments infrastructure will enable it to charge lower fees to users of its consumer app, making it more competitive.
Fernandez said that guaranteed service delivery is driving the growth of the startup's consumer business, which now accounts for more than 90% of the company's revenue. He said Nara is on track to surpass 500,000 customers and has already achieved profitability.
The payments platform has also attracted customers, including UK-based fintech firm TransferGo, which is an early adopter of Rafiki, using it to make payments to Africa.
“For Rafiki, Nala's current clients range from global payroll providers such as Kadana, to global remittance companies such as TransferGo, to global banks making cross-border payments. The focus is on enabling financial institutions and services to make cross-border payments,” Fernandes said.
Opportunities for the remittance industry
Nara's plans to offer remittance services to other emerging markets, including Asia and Latin America, come as the World Bank predicts strong growth in the sector this year.
According to the World Bank's Migration and Development Report, remittance flows to sub-Saharan Africa are expected to grow by 1.5% after a slight decline at $54 billion in 2023. Growth is also expected in regions such as East Asia and Pacific (excluding China), South Asia, and Latin America and the Caribbean. This growth means demand for remittance services will continue.
“In India, migrants send over $125 billion a year in remittances and as more people leave the country, the market is expanding. This creates opportunities to serve these customers, but global trade between regions is also only increasing. Trade is booming in the Asia-Africa region and we need to ensure that funds are moving to make this happen,” Fernandes said.
While demand for remittance support is growing, the World Bank notes that cross-border remittances remain costly. For example, the global average cost of sending $200 was 6.4% of the amount sent. But digital remittances cost 5% less than non-digital remittances at 7%, giving an advantage to services offered by peers such as Nala and Flutterwave. Nala says lowering remittance costs is at the core of its services.
“We are confident that Nala will be a leader in sending remittances to Africa's next generation, who are expected to make up 35% of the world's youth by 2050,” said Lauren Kolodny, founding partner at Acrew, adding, “The team has the deep local knowledge, fintech expertise, and unique community-building know-how to build a cross-border payments system for the next billion people.”