The remittance corridor provider between US and Philippines, SendFriend, has raised $1.7 million in pre-seed funding by thirteen Venture Capitalists.
The US-based company announced on Monday that the list of investors includes Ripple, MIT Media Lab, Barclays, the Mastercard Foundation, TechStars, Mahindra Finance, 2020 Ventures, and 8 Decimal Capital, Deloitte and New York Angels.
Yuan Ruan, Founder of 8 Decimal Capital, one of SendFriend’s investors noted that,
According to a report by World Back in April 2018, the remittance cost for migrant workers is increasingly becoming unsustainable. The global average cost of sending $200 was 7.1 percent in the first quarter of 2018, more than twice as high as the Sustainable Development Goal target of 3 percent.
SendFriend was launched by ex-members of World Bank, MoneyGram, MIT, and Harvard Business School. Its pilot project was to establish a low-cost remittance corridor between the Philippines and the United States.
To achieve its goals of reducing the cost of remittance for OFW (Overseas Filipino Workers), SendFriend entered into a partnership with Ripple Labs to use their xRapid remittance solution. xRapid leverages its blockchain asset, XRP, as a liquidity vehicle to transfer value globally. The cost of remittance associated with xRapid is considerably less.
David Lighton, CEO and Co-Founder of SendFriend, noted that,
The issue of remittance cost had haunted the workers and the facilitating banks equally. There is also political and regulatory pressure on the FinTech companies to provide low-cost services to OFWs. UAE Government had recently ordered the remittance providers to offer 50% rate cuts in the remittance cost. SendFriend proposes to cut back cross border payment costs by 65%. The total remittance cost for the entire world was above $40 billion. The problem of remittance cost is prevalent throughout the world and many start-ups like SendFriend have adopted Blockchain to address the issue. FinTech innovators from Africa and Asia are predominantly looking for ways to reduce remittance cost for its workers as well. The pre-Seed fund of $13 million with glorious partnerships and sponsorship leads the race ahead of others.
In the long run, a swelled SendFriend could face competition from other remittance startups in the blockchain space. From Africa, a larger remittance market itself, BitSoko, BitPesa, GeoPay, and BitSure, are among the leading blockchain-fintech startups. From Asia, Bitspark, Bloom, Coins.PH, Rebit, and Payphil have already started exploring remittance services as a business model.