Venture capital is seeing an opportunity to investment in startups developing new technologies for international money transfers that help to eliminate some of the forms, costs and timescales of traditional systems. In the last 2 years they have inverted $104M in 39 transactions according to cbinsights sources.
Traditionally, international remittance customers have relied on physical-based companies for their transactions. The dominant player in this market has so far been Western Union, which today has a market capitalisation of more than $ 9.5B.
Looking at year-on-year developments, business activity in the international money transfer space has increased by 60%. The successful IPO of money transfer services company Xoom Corp (backed by NEA and Sequoia Capital) in February may be one reason for the notable increase in business activity.
The 79% of the early stage operations
Over the past two years, early stage deals (seed and Series A) have accounted for 79% of deal activity in the money transfer market. In fact, M&A activity in seed stage startups has accelerated by 160% on a year-over-year basis with new companies recently receiving investment as TechStars grad Moni Technologies and Azimo funded by e.ventures. En el crecimiento de la actividad en empresas fase semilla destaca la disminución de la media y de la mediana del tamaño de las operaciones en los últimos trimestres. Desde 4T’11 que incluyó una ronda de $ 25M a Xoom, the average transaction size has been reduced by 70% and the median by 88%.
«Este efecto también ha sido generalizado en la inversión en startups que ha visto reducirse el importe de las operaciones a ambos lados del Atlántico. También en España ha habido operaciones en Fintech. La startup Kantox es la que más relevante para el segmento de transferencias internacionales, permite cubrir el riesgo de tipo de cambio a un precio ajustado sin requerir ningún tipo de garantía para ejecutar la operación» analiza Diego Gutiérrez experto en finanzas corporativas en Abra Invest.
El 50% de las operaciones han nacido fuera de los principales «hubs» tecnológicos de USA
Interestingly, most of the technology companies present in the international remittance sector are outside Silicon Valley, in fact, 50% is outside the North American technology hubs with a prominent presence from London with startups like TransferWise, The Currency Cloud and Azimo.
