Nigerian tech startup Afriex raises $1.2M seed to expand its operations across Africa

A summer 2020 Y Combinator-backed Nigerian tech startup, Afriex today announced the success of its $1.2 million seed round.

The seed will opportune Afriex the privilege to extend its operations and services to other countries in Africa, according to TechCrunch.

One of the challenges Africans in the diaspora face is sending money from the U.S. to Africa. Although there are other remittance platforms like Western Union, there is a transfer fee attached to each transaction, and it takes four to five working days for money sent from a U.S. debit card to drop in a Nigerian bank account.

To provide a solution to this change, Afriex and other companies like it, offers digital remittance services for Nigerians within and outside Nigeria. There have also been several fast-growing crypto remittance platforms that fix the cross-border payment issues by providing an alternative to remittance in a lesser time and lower fees. Through its app, Afriex allows users to “deposit cash on the app, send money to a bank account or another user, and withdraw money to a connected bank or debit card.”

The Nigerian-based company was founded by Tope Alabi and John Obirije in 2019. Afriex was a participant in the YC Summer of 2020. Its services include providing instant, zero-fee money transfers to Nigerians at home and in the diaspora through its digital payments platform.

Alabi told TechCrunch that he also experienced the same difficulty of sending money to and from Nigeria, Ghana, Kenya, the United States, and Canada.

“We would go back home every two years and even then, I would always take note of what was missing and what could be improved. I would find myself having to pay for foreign expenses with money that was sitting in a US bank account,” Alabi said.

“Traditional remittance companies were so slow and expensive that I knew I could do better with crypto. Our goal is to build the world’s largest remittance company, starting with emerging markets.”

The Afriex seed round was led by Pan-African VC firm Launch Africa, alongside other participants including Y Combinator, Brightstone VC, SoftBank Opportunity Fund, A$AP Capital, Future Africa, Ivernet Holdings, Uncommon Ventures, Precursor Ventures, and Processus Capital. Also, angel investors such as Russell Smith, Furqan Rydhan, Mandela Schumacher-Hodge, and Andrea Vaccari were participants.

Afriex is currently operational in Ghana, Kenya, and Uganda. It has built its business on stablecoin – a U.S. dollar-backed cryptocurrency. Similar to what traditional remittance platforms like Western Union and Wise do, Afriex buys cryptocurrency in one country and sells it in another country at better exchange rates.