Global remittance startup SendFriend has raised $1.7 million in pre-seed funding by 13 participants.
The US company announced Monday that it had received support from MIT Media Lab, Barclays, the Mastercard Foundation, Ripple, TechStars, Mahindra Finance, 2020 Ventures, and 8 Decimal Capital. Other companies that joined the round at an earlier stage include Deloitte and New York Angels.
Launched in May 2017 by a group of techies with experience at the World Bank and Moneygram, SendFriend proposes to open its first remittance corridor between the Philippines and the United States. The startup is an alumnus of the Barclays Accelerator Program. And, it entered into a partnership with Ripple Labs to use their xRapid remittance solution.
As covered by CCN earlier, xRapid leverages its blockchain asset, XRP, as a liquidity vehicle to transfer value across borders – more swiftly and cheaply than a traditional remittance service. Ripple Labs’ product has already attracted a large user base, including Euro Exim, MercuryFX, Cuallix, and Catalyst Corporate Credit Union. Atop that, financial giants like Western Union, MoneyGram, Viamercias, and IDT have also trialed xRapid, albeit none of them integrated the solution fully.
David Lighton, CEO and Co-Founder of SendFriend, praised xRapid for improving the startup’s overall efficiency, stating that:
“These are real-time settlements so we don’t have to do pre-funding, we don’t have to park money in the receiving corridor and then manage the foreign exchange risk. We can just do it one by one as the transactions go through.”
According to a World Bank report from April 2018, the Philippines was the world’s third largest remittance country. It received $33 billion in total from its Overseas Filipino Workers (OFW). In the US only, migrants sent more than $650 billion in remittances back home. At the same time, they paid $45 billion in just commissions.
The World Bank in the same report predicted that the cost of remittance would increase in the future. It noted that only a few countries were taking aggressive steps to curb the commissions. UAE, for instance, passed a new law that ordered banks to offer a 50% discount to OFW’s remittance requests.
Yuan Ruan, Founder of 8 Decimal Capital, one of SendFriend’s investors, hinted that the startup was looking to alternative revenue models to ensure cheaper remittance services for OFW.
“SendFriend has a good combination of an experienced team, large $650 billion remittance market, investors that provide more than just capital, and a growth strategy focused on more than revenue from transactions including APIs and white-label solutions,” said Ruan.
In totality, SendFriend proposed to cut back cross border payment costs by 65% less than the industry average.
In the long run, a swelled SendFriend could face competition from other remittance startups in the blockchain space. From Africa, a larger remittance market itself, BitSoko, BitPesa, GeoPay, and BitSure, are among the leading blockchain-fintech startups. From Asia, Bitspark, Bloom, Coins.PH, Rebit, and Payphil have already started exploring remittance services as a business model.