Fintech
Nala to use $40M Series A to build B2B payments platform and expand remittance services
NalaA remittance startup that is expanding its portfolio with a new B2B payments platform has raised $40 million in capital in a rare deal that becomes one of the largest Series A transactions in Africa.
The oversubscribed round was led by San Francisco-based VC firm Acrew Capital, with participation from DST Global, Norrsken22, HOF Capital, and existing investors including Amplo and NYCA Partners. Several angel investors, including fintech founders Ryan King of Chime and Vlad Tenev of Robinhood, also made investments.
Founder & CEO of Nala Benjamin Fernandes told TechCrunch that the new capital injection, which follows a $10 million injection seed in 2022, will fuel the company’s global growth plans, which include expanding its remittance business to serve Asian and Latin American markets.
Currently, Nala, through its consumer app, allows people in the EU, UK and US to send money through 249 banks and 26 mobile money services in 11 markets across Africa. Where Nala has integrated with mobile money services like Kenya’s M-Pesa, senders can pay bills directly into local mobile wallets.
Fernandes says the decision to add payment capabilities was informed by user demands for 360-degree control of their money. The fintech plans to scale these offerings to new planned markets, starting with Asia.
Nala is also doubling down on its B2B payments platform launched in March to serve global businesses making payments to and from Africa.
“This $40 million funding round marks a pivotal moment for Nala. It will enable us to go beyond remittances and extend our reach beyond Africa, building a robust payments ecosystem. We are reinvesting this money into improving our infrastructure, ensuring reliable and low-cost payments for all. With the launch of our payments systems and the expansion of our B2B platform Rafiki, we are not just talking about change, we are building it. We have some bold and ambitious plans, give us a couple of years,” said Fernandes.
Fernandes launched Nala in 2017, initially to offer local money transfers in Tanzania, but changed course in 2021 to also allow remittances from abroad.
The startup’s new B2B platform, RafikiIt also powers Nala’s consumer app. Fernandes told TechCrunch in a previous interview that they decided to build the payments platform to ensure the reliability of their remittance services and to serve global businesses looking for reliable services.
Through Rafiki, which integrates directly with banks and mobile money providers, Nala says it can ensure service availability for its customer service. Additionally, its payment infrastructure means lower costs for its consumer app users, making it more competitive.
Ensuring service delivery, Fernandes said, has been the fuel behind the startup’s growth in consumer business, which now accounts for more than 90% of its revenue. He said Nala is on track to surpass 500,000 customers and has already achieved profitability.
The payment platform is also gaining new customers, including British fintech TransferGo, which uses Rafiki for Africa payments.
“For Rafiki, live customers on Nala range from global payroll providers like Cadana to global remittance companies like TransferGo and global banks making cross-border payments. The goal is to enable institutions and financial services to make cross-border payments,” Fernandes said.
Opportunities in the remittance sector
Nala’s plans to expand remittance services to other emerging markets such as Asia and Latin America come after the World Bank predicted strong growth in the sector this year.
According to the World Bank’s Migration and Development report BriefRemittance flows to sub-Saharan Africa are forecast to grow by 1.5% after a slight decline in 2023, when they stood at $54 billion. Growth is also expected in regions such as East Asia and the Pacific (excluding China), South Asia, and Latin America and the Caribbean. This growth means that demand for remittance services will persist.
“In India, migrants send over $125 billion a year, and the market is growing as more people leave. That creates opportunities for those customers to serve, but global trade between regions will only increase. Asia and Africa have traded more, and money needs to move reliably to make that happen,” Fernandes said.
While demand for remittance support is growing, the World Bank notes that sending money across borders remains expensive. The global average cost to send $200, for example, was 6.4% of the amount sent. However, the cost of digital remittances was lower, at 5%, compared to non-digital ones at 7%, justifying the services provided by Nala and its peers, including Flutterwave. Nala says reducing the cost of sending money is at the heart of their offering.
Founding member of Acrew Lauren Colodny He said: “We believe Nala will be a leader in remittances for the next generation of Africans who are expected to represent 35% of all young people in the world by 2050,” adding that the team “has deep local knowledge, fintech expertise and unique community building know-how to build the cross-border payments pipeline for the next billion.”