WorldRemit: The secrets to closing a $100m venture capital funding deal
6 min read
18 February 2015
On the back of completing an investment round that means his business has now raised nearly $150m since founding, Real Business quizzes WorldRemit founder and CEO Ismail Ahmed on the best way to get funding.
London-based online money transfer business WorldRemit has closed a funding round worth $100m, backed by Technology Crossover Ventures and prior investor Accel Partners.
Founded in 2010 by former United Nations compliance advisor Ismail Ahmed, the business now has a base in the US and plans to hire 200 new staff.
The financial technology sector has seen a number of new companies enter in the hope of further disrupting a sector that had long been dominated by banks and other dated organisations.
On the back of closing his latest fundraising deal, Ahmed took some of our questions and mapped out where he would like to take his business.
What have the biggest developments in the business been during the last year?
Apart from our two funding rounds, which total $140m, we have done some amazing partnership deals with telcos to enable transfers to Mobile Money services arounds the world. The biggest was an agreement with MTN which enables our customers to send to all 16 of their Mobile Money services. We also opened our US headquarters in Denver at the end of 2014 and have been building up our team there.
How did this fundraising differ from previous ones?
It was bigger, obviously. TCV looked very closely at our business, and the broader remittance market. The knowledge they brought to our discussions was phenomenal. However, it was the same basic things that drove this investment – an acknowledgement of WorldRemit’s growth to date and a recognition of the vast opportunity that lies before us. Right now around 5 per cent of the $550bn remittance market is online – we expect the majority of that to shift to digital in coming years.
What do you think is the secret to raising a $100m venture capital funding deal, and how does it differ from smaller deals?
Anyone investing that sort of money is going to look closely at your fundamentals. So be prepared to spend a lot of time going through your own data and financials as well as supporting industry data. We were always comfortable with that because WorldRemit has done great business since its earliest days – such is the demand for this type of service. Also, you need to have a good sense of what your business is seeking to do and talk about that vision in a compelling way. For us it is not just about the move from offline money transfers to online, but the shift to mobile as both a sending and receiving mechanism – with senders using our mobile apps and recipients using Mobile Money wallets.
Read more about venture capital:
- Tech companies attracting record levels of venture capital funding
- 8 lessons learned from being a venture capitalist
- 5 tips for securing growth finance in 2015
How will you go about spending the money you’ve raised?
We are currently growing our business in the US and we’ll certainly use some of this money to help build the brand there as well as expanding our Denver office which opened in December 2014. We’ll also be investing heavily in our partnerships – particularly with telcos – so we can add many more Mobile Money options for people receiving transfers. We expect to add those across Africa, Asia and Latin America. Finally, we’ll need to find a bigger office in London as we’re currently nearing capacity, having grown from around 50 staff last year to 150 now.
How are you competing against rival companies?
Our rivals are Western Union and Moneygram – the offline money transfer operators. We have focused on offering services that have been sadly lacking in the market – such as the convenience of sending money from a mobile app, adding Mobile Money wallets as a receiving option and a low fees business model. We also don’t handle cash from senders which allows us to address the problem of money laundering which has blighted offline remittance services in the past.
What do you think will happen to the fintech market in 2015?
There is going to be a growing realisation about the scale of opportunity available to companies that address “whole of world” needs or developing world needs. We see many businesses offering Silicon Valley solutions to western problems, but venture capitalists are looking for large scale opportunities that serve genuine human needs.
What three tips would you give to entrepreneurs about to hit the fundraising trail?
Understand your business purpose and be able to tell your story in a compelling way. Get your data straight and expect people to interrogate it. And remember it is a two-way discussion – you are deciding whether you want to work with these people as much as they are evaluating your business.