Nala, a remittance startup, has secured $40 million in equity funding in a significant Series A round, marking one of the largest transactions of its kind in Africa. The oversubscribed round was led by San Francisco-based venture capital firm Acrew Capital, with participation from DST Global, Norrsken22, HOF Capital, existing investor Amplo, and several angel investors, including fintech founders Ryan King of Chime and Vlad Tenev of Robinhood.

Nala’s founder and CEO, Benjamin Fernandes, said that this new capital injection follows a $10 million seed round in 2022. The funds will support Nala’s ambitious global growth plans, including scaling its remittance business to serve markets in Asia and Latin America.

Currently, Nala’s consumer app allows users in the E.U., U.K., and U.S. to send money across 249 banks and 26 mobile money services in 11 African markets. In regions like Kenya, where Nala has integrated with mobile money services such as M-Pesa, remitters can pay bills directly into local mobile wallets. Fernandes explained that the decision to add payment capabilities stemmed from user requests for comprehensive control over their finances. The fintech aims to extend these offerings to new markets, beginning with Asia.

In addition to expanding its remittance services, Nala is enhancing its B2B payments platform, Rafiki, which launched in March to support global businesses making payments into and out of 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,” said Fernandes. “We’re reinvesting this money to enhance our infrastructure, ensuring reliable, low-cost payments for all. With the launch of our own payment rails and the expansion of our B2B platform Rafiki, we’re not just talking about change, we’re building it. We’ve got some bold, ambitious plans, give us a couple of years.”

Fernandes initially launched Nala in 2017 to offer local money transfers in Tanzania, but pivoted to enable foreign remittances in 2021. The startup’s new B2B platform, Rafiki, also powers Nala’s consumer app. By directly integrating with banks and mobile money providers, Nala can guarantee the reliability of its remittance services and offer lower charges to users, enhancing its competitiveness.

Guaranteeing service delivery has fueled the growth of Nala’s consumer business, which currently accounts for over 90% of its revenues. Fernandes revealed that Nala is on track to surpass 500,000 customers and has already achieved profitability. The payments platform is also attracting clients, including U.K.-based fintech TransferGo, which uses Rafiki for African payouts.

“For Rafiki, live customers on Nala range from global payroll providers such as Cadana to global remittance companies such as TransferGo and global banks doing cross-border payments. The focus is enabling financial institutions and services to make cross-border payments,” said Fernandes.

Opportunities in the Remittance Space

Nala’s plans to extend its remittance services to other emerging markets, such as Asia and Latin America, align with the World Bank’s predictions for the sector. According to the World Bank’s Migration and Development Brief, remittance flows to sub-Saharan Africa are expected to grow by 1.5% after a slight drop in 2023 when they settled at $54 billion. Growth is also anticipated in regions like East Asia and the Pacific (excluding China), South Asia, Latin America, and the Caribbean. This expected growth underscores the enduring demand for remittance services.

“In India, migrants send over $125 billion a year, and the market is growing with more people leaving. This creates opportunities for those customers to be served but also global trade between regions that will only increase. The Asian and African regions have been trading more, and money needs to move reliably to make this happen,” said Fernandes.

As demand for remittance support grows, the World Bank notes that sending money across borders remains costly. The global average cost of sending $200, for instance, is 6.4% of the amount sent. However, digital remittances cost 5%, compared to non-digital at 7%, making a strong case for services provided by Nala and its peers, including Flutterwave. Nala emphasizes that reducing the cost of sending money is central to its mission.

Acrew founding partner Lauren Kolodny expressed confidence in Nala’s future, stating, “We believe Nala will be the leader in remittances for the next generation of Africans who are expected to account for 35% of all the world’s youth by 2050,” adding that the team “has deep local knowledge, fintech expertise, and unique community-building know-how to build the cross-border payment rails for the next billion.”