Year-over-year deal activity in the international money transfer market has jumped 60% on the back of healthy early-stage activity.
Traditionally, international remittance and money transfer has relied on physical outposts to facilitate transactions. The most dominant player in the money transfer market has been Western Union, which today has a market cap of over $9.5B.
Now, venture investors are seeing a big opportunity in startups bringing new technologies that can help eliminate some of the forms, fees and time attached to the traditional money transfer process. In the past eight quarters, funding to money transfer startups hit $104M across 39 deals.
On a year-over-year basis, deal activity in the international money transfer space has jumped 60%. The successful IPO of money transfer service Xoom Corp. (backed by NEA and Sequoia Capital) in February may be one reason for the notable rise in deal activity.
In the past two years, early-stage deals (Seed/Series A) have taken 79% of deal activity in the money transfer market. In fact, seed deal activity has accelerated 160% on a year-over-year basis with recently seeded startups including TechStars grad Moni Technologies and e.ventures-backed Azimo. The growth in seed activity in the space is highlighted in the declining average and median deal size over the past several quarters. Since Q4’11 which included a $25M round to Xoom, the average deal size in the space has declined 70% and the median deal size has fallen 88%.
Interestingly, the increasing contingent of venture-backed international money transfer startups are largely based in markets outside Silicon Valley. As shown below, over 50% of deal activity in the past two years went to geographies outside of major U.S. tech hubs including a strong presence of startups based in London such as TransferWise, The Currency Cloud and Azimo.