Deal focus: InstaRem bids for the big time

Cross-border digital money transfer is a popular segment for venture investors, but due to a prevalence of business models based on replicable software and tools that depend on legacy wire channels, few players have achieved global scale and later-stage funding success. Indeed, it’s arguable that only one start-up in Asia fits this description.

Singapore’s InstaRem claims to be the only Asian digital cross-border payments company with a presence in more than 50 countries. This week, it closed a $41 million Series C round led by Vertex Ventures, the VC arm of Temasek Holdings, with a view to further broadening its footprint. James Lee, a managing director at Vertex, says the company’s success has been due to an emphasis on laying systemic foundations, while other players follow easier operational paths.

“InstaRem is taking on the challenge of building out its own proprietary franchise of licenses across geographies and striking partnerships with banks in key markets to enable not just cross-border netting of balances, but also leveraging bank balance sheets to facilitate greater transaction volumes,” Lee says, noting that a focus on technical and regulatory groundwork has kept competitors at bay. “Other global cross-border remittance players are actually transacting on InstaRem’s infrastructure.”

Growth plans for 2019 include the opening of a regional Latin American headquarters, expanding teams in the UK and the US, and launching a cards platform in multiple markets. This will build on recent progress securing card issuing abilities from Visa that are usable in more than 25 countries, the development of payment collection services for small to medium-sized enterprises in 35 countries, and establishing a partnership with Bank Negara Malaysia.

Vertex, an early-stage investor that backed the company’s Series A in 2016, was only able to keep pace with this progress through the launch of a new late-stage vehicle. The $250 million Vertex Growth Fund began investing in January with a mandate to provider follow-on support for the firm’s early-stage funds in cases where portfolio start-ups are deemed to be at an inflection point. Three investments have been made to date, but InstaRem marks the first in Asia. 

InstaRem’s core service aims to help customers send payments overseas faster and at lower cost than Western Union and PayPal, and with greater transparency on foreign exchange rates. It is said to achieve this within seconds, rather than the one or two business days typically required. The company has raised $59.5 million in total to date and is planning to IPO in 2021. 

“The bar is set very high in terms of operating in this ecosystem, finding the right people, knowing the right channels, and having the right access. That requires a team that of sector experts and industry incumbents,” Lee adds. “For InstaRem, they’re growing 2-3x per year in terms of volume of transfers, and based on what we see, they are definitely going to continue to do so going forward.”

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• Topics
• Southeast Asia
• Financials
• Technology
• Expansion
• Singapore
• Financial Services
• TMT
• Vertex Management (II)