Nala, an emerging remittance company, recently expanded by introducing a novel B2B payment service, has secured an impressive $40 million in equity. This financing marks one of the most substantial Series A funding rounds on the African continent.
The funding round, which saw high demand, was spearheaded by Acrew Capital from San Francisco, with contributions coming from DST Global Partners, Norrsken22, HOF Capital, as well as prior backers like Amplo and NYCA Partners. Also contributing were several prominent angel investors, among them fintech pioneers Ryan King from Chime and Vlad Tenev of Robinhood.
According to Nala’s CEO and founder, Benjamin Fernandes, as told to TechCrunch, this significant financial boost, coming on the heels of a $10 million seed round in 2022, aims to propel the company’s ambitious expansion efforts globally, targeting both Asian and Latin American markets in its scale-up plans.
Presently, Nala offers a consumer application that facilitates money transfers from individuals located in the E.U., U.K., and U.S. to a network encompassing 249 banks and 26 mobile money services across 11 African territories. This includes seamless integrations with mobile money platforms like M-Pesa in Kenya, enabling users to directly pay bills into local mobile accounts.
Enhancing payment functionalities responded to user feedback, aiming at offering comprehensive money management capabilities. Nala intends to broaden these services into its forthcoming market entries, starting with Asia.
Furthermore, Nala has set its sights on enhancing its B2B payments service, introduced in March, to cater to international businesses conducting transactions in and out of Africa.
“This noteworthy $40 million financing is a transformative step for Nala, setting us on a course to transcend remittance services and extend our footprint globally. This capital will be strategically reinvested to fortify our infrastructure, ensuring efficient, cost-effective payment services for our users. With the introduction of our proprietary payment infrastructure and the expansion of our B2B platform, Rafiki, we are actively constructing the architecture for change. Stay tuned for our compelling, grand plans in the years ahead,” Fernandes articulated.
Originally launched in 2017 to facilitate domestic money transfers in Tanzania, Nala shifted its focus in 2021 towards enabling international remittances.
The firm’s newly launched B2B service, Rafiki, also powers the consumer application of Nala. In a previous discussion with TechCrunch, Fernandes explained that developing Rafiki was crucial to ensure the reliability of their remittance offerings and to address the needs of global businesses seeking dependable financial transactions.
Rafiki’s direct collaboration with banks and mobile money operators ensures uninterrupted services for consumers. Additionally, by owning its payment infrastructure, Nala can offer lower fees, elevating its competitiveness in the market.
Delivering consistent services has been instrumental in the growth of Nala’s consumer segment, which currently represents over 90% of its revenue. Nala is on track to surpass half a million customers and has already achieved profitability, said Fernandes.
The payments platform is steadily attracting a client base, with early customers including the U.K.’s TransferGo, utilizing Rafiki for African disbursements.
“Rafiki currently supports a variety of clients through Nala, from global payroll companies like Cadana to remittance specialists such as TransferGo and major banks engaged in cross-border payments. Our primary goal is to facilitate seamless international payments for financial institutions and services,” Fernandes detailed.
Potential in the Remittance Arena
The strategic move to extend Nala’s remittance services to emerging markets in Asia and Latin America aligns with optimistic forecasts by the World Bank for the sector’s growth.
The World Bank’s Migration and Development Brief projects a rebound with a 1.5% growth in remittance flows to sub-Saharan Africa, following a slight dip in 2023, stabilizing at $54 billion. Anticipated growth in other regions, including East Asia, the Pacific, South Asia, and the Americas, underscores sustained demand for remittance services.
Fernandes discussed the immense potential in countries like India, where migrants remit upwards of $125 billion annually, pointing to robust opportunities for Nala to serve this burgeoning demand, thereby facilitating greater global trade.
Despite the persistent high costs of cross-border transactions, the World Bank highlights that digital remittances offer a more economical alternative. This competitive edge underscores Nala’s focus on reducing the financial burden of remittances, distinguishing it and competitors like Flutterwave in the market.
Acrew’s founding partner, Lauren Kolodny, expressed confidence in Nala’s leadership in the evolving remittance landscape, particularly among Africa’s burgeoning youth demographic, expected to represent a significant chunk of the global youth population by 2050. Kolodny praised the Nala team for its profound understanding of local contexts, fintech acumen, and ability to cultivate community engagement, positioning it to pioneer cross-border financial infrastructure for the upcoming billion users.
Compiled by Techarena.au.
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