Ismail Ahmed knows all about the
channels that migrants use to send
funds back home – at one point he was
a refugee from Africa doing just that.
Nearly a decade on, the London-based
startup has almost four million customers,
who send money from 50 countries to
more than 150. With nearly $375 million
in funding, the company is soon expected
to reach a billion-dollar valuation.
Ahmed is now the co-founder of online
money transfer service WorldRemit.
But in 1988, during a brutal civil war
in his homeland, he fled Hargeisa, the
capital of Somaliland, smuggled out in
a tipper truck. He made it to Britain and,
while studying, took on casual work such
as strawberry picking to send money
to his family – who were by then in a
refugee camp in Ethiopia. The transfers
were expensive and could take months to complete.
In the early 2000s, Ahmed got a job at the UN as an adviser to
money transfer companies in east Africa. While there, he says he
noticed corruption in the UN’s Somalia remittance programme.
“I became a whistleblower and lost my job,” he recalls. But in
2010, he received £200,000 from the UN in compensation for
unfair treatment – and, having completed an MBA from the
London Business School, used the money to set up WorldRemit.
Ahmed, who moved from CEO to non-executive chairman
in 2018, argues that WorldRemit’s business model is unique.
Instead of sending funds from bank to bank like, for example,
TransferWise or the traditional money transfer companies
Western Union and MoneyGram, the transfers can be sent
directly to a mobile wallet – via a smartphone.
While Western Union and MoneyGram have operated
remittance services for years, they still rely on intermediate
agents, typically corner shops, where people go to collect their
cash. The agents are responsible for carrying out regulatory
compliance such as “Know Your Client” identity checks,
documenting every money movement.
WorldRemit partners with local banks and mobile networks;
in Kenya, for example, it is working with electronic wallet
service M-Pesa, so that money can be transferred instantly. The
recipient can retrieve the funds as a bank deposit into a local
WorldRemit bank account; as mobile money; as phone airtime
top-up; or as cash at a supermarket. The fees are two to three
per cent lower than those charged by most banks. WorldRe-
mit’s closest rival is Remitly, another digital-only company
sending money from developed to developing countries.
The digitisation of remittances also helps safeguard against
money laundering: WorldRemit’s system checks users against
international watchlists and sanction databases, and can flag
dubious activity. “If a transaction is suspicious, there is a wealth
of data to trace it back to a bank account, a card, an identity,”
says Ahmed. “That’s coming a long way from agents, who
can be untrained at best, and turn a blind eye at worst.” And,
he adds, WorldRemit has never been fined. Daphne LePrincecurrent: partner at London-
based tech law firm Cooley
experience: more than
20 years’ in the UK and US
“People who run tech and
life science companies are
focused on their business
and don’t invest enough in
making sure the books and
records of the company are
all cleaned up. When it’s time
to sell, it needs to be a priority.
Once a buyer starts looking
at documents, they should
already be in order. Buyers
can lose confidence pretty
quickly if they see it’s a mess.
Beware of conditions
in contracts [for example,
stipulations as to compliance
to certain regulations]. The
first thing I do when I get a
draft transaction agreement
is look at conditions. When
you’re representing a seller,
the seller is always focused
on closing with as few
conditions as possible. Parse
through each and every one- look at it critically and think:
is this absolutely necessary?
If not, try and get rid of it.”
THE M&A EXPERT
MICHAL BERKNER,
COOLEYTHINKING GLOBALLY 078> continuedILLUSTRATIONS: BILLY CLARK. SPOT ILLUSTRATION: SODAVEKT11-19-WSopener.indd 52 09/09/2019 09:01