An estimated 160 million people born in Africa now live outside the continent. For some, education was the vehicle that took them away, but for others, it was work. Yet, most have one thing in common – the need to send money back home to friends or relatives.
Despite contributing $95 billion to the African economy in 2022, the process of sending money is fraught with difficulties. Financial institutions like Western Union and MoneyGram are some of the most popular options, but there’s still room for more entrants.
According to Olalere, who previously worked at Flutterwave and Uber, after the pair left OPay, they wanted to solve problems they encountered while working for the fintech. While cross-border payment within the continent was a problem they identified, facilitating payments from the West was an equally attractive challenge to solve.
LemFi offers a multi-currency account for immigrants to hold, send, and receive money in both the currencies of their home country and that of their host country. Users can also send money to more than 30 countries.
Today, the startup is announcing a $33 million Series A round led by Left Lane Capital. Global Founders Capital, Zrosk, Y Combinator, and Olive Tree are the other investors in the round.
Since it launched in 2020, the startup has picked up an IMTO licence in Nigeria and completed the acquisition of Rightcard Payment Services in the UK. The acquisition now allows LemFi to enable higher transaction amounts and offer better fund security for users. The IMTO licence, on the other hand, ensures it can process remittances directly to Nigerian bank accounts without an intermediary. In June, it also launched in Kenya, and changed its name from Lemonade Finance to LemFi.
Explaining the reason for the rebrand, Cochran explained that when the startup launched, the founders always knew that, given the popularity of the name lemonade, there was a possibility that they would run into trademark or copyright issues with older brands.
Despite raising a large round amid a global venture capital slowdown, Olalere and Cochran admit that it was a difficult and painful process that took the better part of a year.
Join over 3,000 founders and investors
“VCs are just much more specific about the investments they want to make. They make much more informed decisions; they have all the time in the world to decide, whereas once it was, ‘Hey, we’re closing in two weeks. Are you in or out?’ On top of all of that, we’re a financial services company, and so you want to be sure that whoever is going to lead can do an in-depth diligence. That can take a long time,” Cochran said.
As part of the transaction, Matthew Miller, Principal at Left Lane Capital, will join LemFi’s Board of Directors.
“LemFi has been very deliberate and strategic in acquiring licenses and building a robust network of financial institution partners to facilitate cross-border payments for immigrants. We’re excited to support LemFi as it expands its product offering to serve more immigrant communities globally,” he said.
How Africans are treated by global financial institutions is well documented. PayPal, for example, allows account opening for Africans, but not withdrawals, and Olalere explains that it has influenced how they’ve built LemFi. Identifying how they could onboard Africans who are often locked out of global financial systems while ensuring that they protect their partners from potential risks has been one of their major issues.
Having seen their operations grow to accommodate more countries, Cochran added that navigating the different regulatory requirements has been a vital learning process for the team.
While declining to comment on the extent of their growth or the specific terms of the acquisition, the co-founders explained that the size of the round is an indication of the growth they’ve experienced. The funds will now be used to drive product development, expansions, and potential acquisitions.