Abra Raises $12M, Bitcoin Powered Remittance App Available “Soon”
[Abra](http://www.goabra.com) is making cash mobile, enabling anyone to store digital cash, valued in any currency, directly on a phone with no bank required. The company’s “highly oversubscribed” series A round brings the investment total to US$14m.
Abra has closed a “highly oversubscribed” Series A funding round, securing just over US$12m. The remittance startup is currently beta testing an app that uses Bitcoin technology to send money around the world. Investors in this round include Arbor Ventures, RRE Ventures and First Round Capital. The company previously raised US$2m in a seed round, earlier this year.
“As early proponents of Blockchain technology, we believe that Abra is one of the companies that’s fully leveraging the potential of the technology by reducing friction in financial services. It’s not about Bitcoin for the sake of Bitcoin – it’s about how the technology can solve problems for consumers worldwide, even if they don’t know what the Blockchain is.”
— – Jim Robinson, RRE Ventures Managing Partner and Abra Co-Founder
Abra is perhaps one of the most ambitious companies in the Bitcoin remittance industry, seeking to create a global network, rather than focus on a specific regional market. Despite being indicated as one of the obvious use cases for Bitcoin and blockchain technology, Bitcoin based remittance services have yet to gain any significant traction.
The company launched earlier this year at the Launch Festival, a largest startup conference, and won ‘Best Overall Company.’ The companies CEO, Bill Barhydt, is also co-founder and chairman of Boom Financial, an international mobile money transferring service. Boom followed a similar premise to Abra, allowing the transfer of money internationally through mobile phones, and raised a total of US$17m.
The startup’s app works through a network of tellers, who are essentially money agents like Western Union’s or MoneyGram’s. Users can send or receive money through them, via the app. Abra holds that its innovation is in the use of bitcoin to settle transactions between the various agents around the world in the background, meaning tellers and users don’t touch the digital currency. Although Abra is primarily targeting emerging markets and cash-based economies, the app allows people to load their credit or debit card to send funds. The startup says the service will be “private, secure, and instant” and will not charge any fees.
“Technically put, Abra is digital cash stored directly on your phone, guaranteed in US Dollars. Abra app-based transfers use the blockchain to settle, and transactions are published directly to the blockchain from your phone. Abra’s back-end servers never touch consumer’s money or their transfer requests. The value of the holdings in your wallet do NOT fluctuate with the value of Bitcoin for at least 3 days after initial deposit onto your phone," wrote Barhydt in a RRE Ventures blog post.
"Abra is not a financial service — it is an app that facilitates storing digital currency equivalent to US Dollars directly on your smartphone and transferring your money from your Abra App to any other Abra App anywhere in the world."
— – Bill Barhydt, Abra CEO
The startup said it will soon announce the general availability of the Abra App in its initial launch markets, having already received registrations from tellers and users in over 80 countries. The firm has been running beta tests since March, in Latin America, the Middle East, and Southeast Asia.
Wei Hopeman, of Asian venture firm Arbor, commented “Arbor sees huge potential for the Abra business model globally, but especially in China and Southeast Asia, which are traditionally large cash economies but leapfrogging into mobile payments and bypassing traditional banking and card infrastructure at an accelerating rate. Making cash mobile will unlock a lot of opportunities in these markets and across the region.” Singapore-based Jungle Ventures and Australia-based Carthona Capital also participated in Abra’s Series A.
In comparison to companies outside of the Bitcoin industry, but still part of the remittance field, Abra’s funding round holds its own. TransferWise secured €6m during it’s A round, Azimo US$11.1m, and Remitly US$11.25m. These companies are among the most prominent startups trying to disrupt consumer money transfers today.
Compared to that of other bitcoin remittance startups, Abras funding round is unprecedented. African startup BitPesa raised $1.1 million in its Series A earlier this year, while Southeast Asian BitSpark and North American Align Commerce each raised an undisclosed “six-figure” sum as part of their respective Angel rounds. Despite being one of the oldest companies in the space, Filipino service Coins.ph has yet to announce a public round.
The jury is still out on whether digital currency remittances will provide a dramatic cut in remittance fees for the world’s poor. And the idea is not without its critics, doubts, or stumbles.
Earlier this month bitcoin remittance startup Beam announced that it would be dropping the digital currency for international debit and credit cards instead. Some of the reasons the startup gave included that bitcoin was too expensive, because of the exchange between local currencies and the digital currency, a lack of adoption among merchants and its volatility.
The firm has now moved away from money remittances and instead offers “value remittances,” which allow people outside of a country to give services or goods, or pay bills directly, but not money. It is a model followed by a number of companies because of reduced fees and easier regulation.
“Using an international debit or credit card, you can pay for utility bills, top up airtime, send gifts or even get errands done back home in Ghana,” Beam CEO and cofounder Falk Benke told Disrupt Africa.
“So no direct cash payouts anymore and we no longer accept bitcoin as means of payment.”
— – Falk Benke, Beam CEO and Co-Founder
Yakov Kofner, money transfer analyst and founder of remittance fee comparison app, SaveonSend, has been among the biggest critics of the digital currencies advantages, having previously said that the case for bitcoin remittances is unproven and its model has yet to be properly thought out.
Konfer makes the case that the transfer of money internationally is not a large proportion of costs for remittance companies, and thus using bitcoin wouldn’t mean a large reduction in fees for consumers. In his opinion other factors are responsible for the cost of remittances, including regulation.
“It becomes apparent that most of [remittance companies’] costs are related to payments for receiving from and discharging funds to customers, customer acquisition, channel infrastructure, customer service, and risk-management-compliance, not in recording transactions or moving money cross-borders,”wrote Kofner in a blog post. “Hence, providers are eagerly looking for more cost-effective ways to collect and distribute funds vis-a-vis customers, acquire customers, deploy offline and online channels, service customers, manage risks of releasing funds before getting paid… not functions where bitcoin seems to be offering a distinctive cost advantage.”
After Beam announced it would be dropping bitcoin, Benke wrote on Twitter that although harsh, Konfer’s opinion is “pretty much in line with my personal thoughts.”
Brave New Coin reaches 500,000+ engaged crypto enthusiasts a month through our website, podcast, newsletters, and YouTube. Get your brand in front of key decision-makers and early adopters. Don’t wait – Secure your spot and drive real impact in Q4. Find out more today!