The funding round, led by Pantera Capital, marks the largest investment in an African Bitcoin startup. The Nairobi based remittance company will use the funds to propel expansion into growing markets.
The recent funding round, led by Pantera Capital, brings the grand total of capital raised by the company to $1.7m. The CEO of Pantera Capital, Dan Morehead, joined BitPesa’s board of directors as part of the investment. A previous investment led by Pantera Capital saw Morehead joining Bitstamps board of directors.
Pantera Capital is an investment firm focused exclusively on Bitcoin. Until recently, Pantera focused on global macro hedge fund investments. Since changing direction the company has invested in 11 bitcoin startups including the Latin American Bitcoin exchange BitPagos, Korean Bitcoin exchange Korbit and blockchain API developer, Chain.
BitPesa will be using the new capital to create new features catering to businesses, as well as expanding their services into new strategic markets. The company currently operates in Ghana and Kenya, but has plans to offer services focused on the Ugandan and Tanzanian markets.
Tanzania and Uganda have small remittance industries, compared to the rest of Africa, but they are growing rapidly. From 2008 to 2013, the amount of remittances flowing into Tanzania doubled from $37m to $75m. Uganda has seen 14 percent year on year growth for a period of 10 years, according to a report by the UN Conference on Trade and Development. Uganda saw $700m flow into the country during 2013, with projections supporting a $1B annual remittance flow.
Uganda is an attractive market because of its size, but also because of its links to the country BitPesa is headquartered in, Kenya. BitPesas local market sends $326m worth of remittances to Uganda each year, making Kenya the largest sender of remittance to its neighbour. BitPesa is hoping to become a key player in the Uganda-Kenya corridor.
While BitPesa is considered the continent’s largest bitcoin startup, it is not alone. In January BNC News reported on South African Bitcoin exchange, IceCUBED, and its expansion into the largest African economy, Nigeria. BitPesa is also not alone in utilizing Bitcoin for remittances on the continent. Ghana based Beam, is attempting the same in Ghana and Sierra Leone. Beam recently launched BitcoinAgainstEbola,org, allowing people to send money to charities fighting Ebola in the region, for a fraction of the regular cost of legacy remittance solutions. Beam also plans to expand into the lucrative Nigerian market.
According to BitPesa CEO Elizabeth Rossiello, during the companies first year of operation the management team have learned a lot about the market, and the customers using its services. BitPesa’s core of loyal and regular customers have been businesses based in east Africa. While a growing market for BitPesa has been businesses in developed countries, with ties to the east African region. These international businesses have been using BitPesa to pay employees and suppliers residing in Africa.
A Google.org backed non-profit, GiveDirectly.org, recently started using Bitpesa to send funds to Kenya, from their operations in Europe. Startups in Nairobi have taken to BitPesa as well, receiving payments from customers aboard. According to John Karanja, the owner of Space Kenya, a mobile app development company in Nairobi, startups in Kenya’s capital city had to make trips to atms to get their money, and then had to deposit it in a bank. Not only does BitPesa provide a service that is ⅓ cost of alternatives, but they can also have the money sent directly to their bank account or M-Pesa account: saving the startups time and money.
In light of the experience acquired over the first year in business, BitPesa has changed its mission from bringing cheap and fast bitcoin-powered remittances to Africa, to providing a selection of payments options to the continent.
The company recently added the ability to buy bitcoins. According to Rossiello this new service has quickly became a popular. BitPesa has also introduced a recurring payment, and multipay service. This feature allows businesses to automate the process of paying several employees who are based in Africa, powered by Bitcoin.
Fresh off the news of the closure of the funding round, the company’s sales team will be going on a tour of several large cities in Kenya and Ghana this month. During their tour, they will be holding events in Nairobi, Kisumu, Mombasa and Accra to make the local populations aware of their services and its advantages.