“Go global as early as possible.”
That’s the advice from Ismail Ahmed, CEO and founder of money transfer service WorldRemit, which last week announced the closure of a $45m funding round.
“We launched in the UK in 2010 and a few months later we launched in Canada. We went global really early and that is what helped us build a big business and attract VCs,” Ahmed told Tech City News.
With close to $200m in funding under its belt, WorldRemit is now a global business, estimated to be worth $500m (unconfirmed by the company) and available to customers in 50 countries.
Securing the funds
According to CB Insights and KPMG, venture capital investment into Britain’s tech companies has reached a new high, with more than $2.2bn raised in the first six months of last year.
With money from venture capitalists seemingly pouring in, just how easy is it to actually score the cash?
“The market is definitely tough today,” said Ahmed. He believes those who can demonstrate traction will most likely be able to raise funds, but this can be difficult for early-stage businesses.
“We have gone past the stage when people can just come up with general numbers,” Ahmed noted, adding that startups now need to be able to provide investors with numbers that depict their path to profitability.
The CEO, whose business has drawn support from heavyweight investors Accel Partners and Silicon Valley Bank, also noted that there continue to be clear differences between the UK and the US funding scene.
“It has always been difficult, and it will remain so, to raise large funds in Europe,” he commented, adding: “Tech businesses based in the West Coast of America tend to raise larger funding rounds, particularly in the growth stage.”
So, how did London-based WorldRemit manage to go from a $546,000 seed round in 2010 to a $40m Series A four years later?
“We delayed taking a Series A,” explained Ahmed, noting that, instead, the business concentrated on garnering support from super angels, who at the time contributed a total of $7.5m.
By delaying the Series A round, the firm was able to concentrate on gaining traction, before turning the focus to on-boarding the right investors.
It was this growth, Ahmed said, that allowed the company to be “very selective” in whom it took money from.
“I think it helped that we only had one VC at that stage. If you get syndicate of three or four different VCs, it’s is quite difficult to deal with at an early stage, because you want to focus on building the business,” he commented.
Tapping into the remittance market – estimated by the World Bank to be worth $610bn this year – WorldRemit’s CEO still believes there’s room for new FinTech players, but said these will be faced with entry-level regulatory challenges which will need to be addressed if the new businesses are to succeed.
In the meantime, the CEO said WorldRemit will use the newly secured funds to expand its partnership network in the emerging markets with a special focus on mobile money services, which currenlty account for 25% of the company’s transactions.
“It’s the fastest growing channel for us,” concluded Ahmed.