InstaReM has been in the news recently about their latest round of funding where the company raised US$13 million. Fintech Asia speaks to Prajit Nanu to learn more about the company and its plans for the future.
Prajit Nanu is the co-founder and CEO of InstaReM which provides cross-border money transfer services for businesses and individuals. He is based in their corporate headquarters in Singapore and is responsible for expanding the business into new markets, and overseeing business operations across our global offices.
InstaReM was founded in 2014 as a disruptor to traditional remittance firms and is currently licensed in Australia, Canada, Hong Kong, and Singapore. By Q4 2017, InstaReM aims to expand into all markets in Europe and the United States.
InstaReM aims to provide fast, secure, cost-effective and transparent digital cross-border money transfer services for individuals and businesses. This means InstaReM’s clients in the four markets are able to remit money to over 50 countries worldwide.
They currently cater to approximately 22000 customers. InstaReM has a growing team of 100 employees across their remittance hubs in Singapore, Gold Coast, Melbourne, Hong Kong, an operational office in Mumbai and their newest technology and operational centre in Lithuania – the company’s stepping stone into Europe.
How did you come about setting your focus on this particular category? Please tell us a little more about the company’s beginnings as well.
My inspiration for setting up InstaReM stemmed from my friend’s encounter while he was trying to pay for a bachelor party in Phuket, Thailand. As he was based in India, he was unable to use his credit cards because they only accepted bank transfers. On top of that, it was extremely difficult to send money out of India. The only solution was to get someone to pay in Thai baht, who was then reimbursed in Indian rupees.
Co-founder Michael Bermingham – who now serves as InstaReM’s Chief Operating Officer – and I saw a need for a transparent and affordable funds transfer platform online. While the fintech sector was booming in 2014 and global investment in the industry tripled to $12.21 billion from 2013, we took the opportunity to combine Michael’s expertise in over the counter derivative and equity markets, and my professional skills in account management and sales, to form InstaReM, which was incorporated in August 2014.
With the capital from our Series A funding round in 2016, we established InstaReM’s basic infrastructure and payment mesh, and partnered a network of mid-tier banks for our cross-border funds transactions. Our strategic decision to base InstaReM in Singapore also paid off. As the financial hub of the region, Singapore has a supportive regulatory market and was a good springboard for us to expand into the markets. Singapore, along with Hong Kong (our other remittance hub in Asia), also has some of the largest expatriate and migrant communities in Southeast Asia who happen to be our target demographic.
What transformations have you undergone as a company since starting up?
InstaReM has seen a massive growth in employees and global opportunities since its conceptualisation in January of 2014. We strategically hired a team with diverse backgrounds and experiences to challenge perspectives, generate ideas and leads, and help position InstaReM as a reflection of each market we serve around the world.
In 2015 we had 10 staff and focused only on one corridor, but today we have 100 staff and are in 150 corridors. As an organisation we continue to evolve and keep growing – by the end of 2017 we will be active in 40 countries and 2,000 corridors.
Additionally, in line with our recent Series B funding, we have recently undergone a branding overhaul with a newly revamped website and logo to reflect our aim to be a truly global company.
Thoughts on the present current Asian fintech landscape? How is it faring so far compared to United Kingdom, Denmark, the Middle East etc. according to you?
There are two technologies in Asia that are becoming increasingly prevalent in start-ups: blockchain and Artificial Intelligence. Both technologies can disrupt and fundamentally change the way we make transactions. It will take out the middleman / aggregator and provide real-time online transaction, while keeping all data safe.
I think the main difference between Asia’s fintech landscape and Europe’s is that Asia’s fintech sector is fuelled by governments instituting market reforms and collaborations between banks, infrastructure players and tech companies. With a more top-down and collaborative approach in Asia, fintech innovators are then able to focus on tackling banking pain points.
There is also a misconception that Asian users are more apprehensive to conduct banking transactions online. However, they are definitely more digitally savvy than their Western counterparts. This rings especially true for people in China. China is a key player in the Asian fintech landscape and most companies would be remiss not to acknowledge the purchasing power of its private individuals and businesses. We plan on entering the Chinese market through our hub in Hong Kong.
Which are the sectors in Asian fintech where you think there are untapped opportunities? There are various geographies with unique challenges and opportunities. How does it fit in with your product and growth plans for the immediate future?
While there are numerous platforms in the market serving cross-border payments for consumers, we feel there is a lack in platforms enabling multi-currency payments across the world for businesses. For instance, if a SME operating in Southeast Asia has to remit money to their employees, they would have to make the transfer in USD. There are 10 countries, all with their own currencies, in Southeast Asia. Hence, digital monetary transactions across cities are then carried out in the more commonly used USD or EUR. This leads to banks and intermediaries benefitting from transaction fees. According to CB Insights, over 60% of Asian banks’ revenue comes from transaction fees alone.
A better infrastructure is an area that requires improvement. At the moment, cross-border transactions are based on bilateral links between banks in various countries (e.g. Australia to India). However, if a sender from Australia wishes to remit money to Nepal and the domestic Australian bank does not have a direct relationship with the receiving bank in Nepal, the funds will have to be sent to multiple partnering banks in various markets in order to reach the receiving bank in Nepal. This process does not only lengthen the transfer time, it also incurs correspondent banking fees inbuilt at every leg of the transaction, resulting in a higher transaction fee for the customer.
To address the inefficiencies of cross-border transactions for businesses, InstaReM’s MassPay platform hopes to alleviate the pain points for businesses by providing a seamless bulk payments portal in which corporations and SMEs are able to disburse money to multiple beneficiaries in multiple currencies.
Please tell us a little about your funding journey – the requirements & objectives in mind when you decided to raise a round/s; the fit you found or were looking for with your investors; what would you be looking for in the future as the business grows?
We raised US$500,000 from Global Founders Capital when we were two people and a PowerPoint in January 2015 during our initial funding.
Our second round of funding took place in March 2016. Series A was led by Vertex Ventures (venture capital arm of Temasek Holdings), and participating firms include Fullerton Financial Holdings, and Global Founders Capital (venture capital arm of Rocket Internet). The amount raised in Series A was US$5 million.
Series B funding is led by GSR Ventures, with participation from SBI–FMO Emerging Asia Financial Sector Fund and existing investors – Vertex Ventures, Fullerton Financial Holdings (FFH), and Global Founders Capital (GFC). To date, we have raised over $18 million from our funding efforts.
InstaReM will use the investment from our Series B funding to build our global payment infrastructure, which has grown eight times in volume since its Series A funding. The funds will also be used to develop new products and licensing activities in new markets.
We were looking for investors GSR Ventures has a strong network in China and the US, and SBI-FMO Emerging Asia Financial Sector Fund has a strong base in Japan and other emerging markets that we can tap on for future expansion plans.
For our future plans, we are aiming to go into Europe and US by Q4 2017. We have fielded an office in Lithuania that will become our foothold into the region, allowing InstaReM access into the European corridor, introducing our transparent and affordable platform to the entirety of the continent. This access to the European corridor is a necessary next step on InstaReM’s journey to becoming a global brand.
What advice would you give to other fintech entrepreneurs?
Choose your investors wisely. Often, young start-ups make the mistake of picking the wrong investors. These are investors who have the money but do not share the same vision as said start-up. Look at it this way: you should pick your investor as though you were picking a wife. You are getting into a marriage with them – one with arguments but at the end of the day, you are able to sit at the same table and sort out your differences.