Afriex was founded in the midst of a wave of financial startups aimed towards underprivileged, and sometimes disregarded, African consumers. According to CB Insights, more than $1.4 billion would be invested in African fintech businesses in 2021, a roughly 7x increase over 2020.
Fintech startups raised more than half of the continent’s total venture capital financing of $2.2 billion in 2021. One probable reason these startups are snatching up funding is that they are gaining momentum. Wise moves an average of £4 billion ($5.2 billion) every month, but Afriex has expanded its client base by 500 percent in the previous six months, with half of its current customers utilizing the platform more more once a week.
When a consumer transacts, the business generates money by arbitraging the currency and cryptocurrency exchange rates. Afriex refused to disclose its revenue. It received a $1.3 million seed round in May of last year and has just finished a $10 million Series A investment at a valuation of $60 million. Sequoia Capital China and Dragonfly Capital led the fundraising, with participation from Goldentree, Stellar Foundation, and Exceptional Capital, among others.
Tope Alabi knew he wanted to launch a firm using what he learnt working at blockchain consultant Consensys when he returned to Nigeria in 2019 after 20 years in the United States. He and future partner John Obirije began testing a variety of concepts, including a hip hop chat bot and a quiz game, all of which failed. But, after much trial and error, they noticed that they were always running into the same issue: trying to pay business expenditures for the numerous start-ups with money held in bank accounts in the United States.
They planned to build a money transfer system that would leverage blockchain to allow users to move money by turning it into stablecoins, which are cryptocurrencies backed by reserve assets. This method makes the transaction free and faster than an existing service such as Wise, which takes a 6.45 percent fee and can take several days to process. They introduced Afriex in 2019, and it quickly gained momentum. “From there, everything went off,” Alabi tells Forbes. “I’m not sure if it was the epidemic, but we really started increasing quickly.” The service began in Nigeria and has now spread to Uganda, Kenya, and Ghana.