Azimo, the U.K. money transfer start-up taking on the likes of Western Union and MoneyGram, has raised 20 million euros ($23 million) in debt financing from the European Union.
The loan from the European Investment Bank (EIB), which is the lending arm of the EU, will help the financial technology firm build out its payments platform and expand its presence in Poland.
Azimo co-founder and Chairman Michael Kent told CNBC the company now primarily builds its technology out of the Polish city of Krakow, where it hires 130 of its 160 global staff.
“We find we can get exceptional talent more usually there than anywhere else in Europe,” he said in an interview. “Krakow has become a bit of a fintech hub.”
EU commissioner Valdis Dombrovskis said the bloc “will continue to support successful companies such as Azimo to boost the European fintech sector and improve the experience of millions of customers.”
The EIB has previously invested in Swedish payments firm iZettle, which was snapped up by PayPal in 2018, while more recently it injected 50 million euros into taxi app Bolt.
The investment from Europe into a U.K. company arrives just days after the country officially withdrew from the bloc. The irony isn’t lost on Kent, who says he anticipates talks on future relations between the two trading partners to be “messy.”
U.K. Prime Minister Boris Johnson and the EU’s chief Brexit negotiator Michel Barnier appeared to butt heads on Monday, with Johnson rejecting Brussels’ competition and environmental rules while Barnier insisted some guarantees were required to create a “level playing field.”
“We are stepping into the unknown,” Kent said. “It’s going to be messy. You can already hear from the rhetoric that it’s not going to be a friendly visiting rights and equal division of the money divorce.”
The London-headquartered fintech firm secured a license in the Netherlands to continue passporting its service into EU member countries, regardless of how Brexit turns out. Nevertheless, Azimo’s boss said it wouldn’t be quitting the U.K. anytime soon as “it’s still the best tech ecosystem arguably in the world.”
Founded in 2012, Azimo lets people send money to more than 200 countries, with the option to transfer funds to a bank account, cash location or mobile wallet. The firm claims to offer foreign exchange rates and fees at a fraction of the cost provided by banks.
Though it competes with banks and larger money transfer players like Western Union, Azimo is also up against competition from a raft of fintech peers including TransferWise, WorldRemit and Remitly.
Like TransferWise, Azimo was one of a rare group of fintech start-ups to notch profitability last year, though it’s unlikely it will do the same in 2020.
“With some additional funding we’re making a decision as to whether or not to get below profitability again,” Kent said. “I think we’ll probably step on the gas. Knowing you can get to profitability, that you have a very clear bridge to profitability, is important.”
Whereas TransferWise, which was valued at $3.5 billion last year in a $292 million secondary share deal, focuses on high-value payments, Azimo targets “much lower” transaction sums, Kent said. Still, it processed only $1 billion in payments last year, versus TransferWise’s monthly $5 billion in transactions.
Europe is Azimo’s largest market, and Kent said the firm’s focus there wasn’t by accident. “If you look at the consumer cross-border space, some of the biggest, most poorly-served and highly-priced markets are Germany, France, Spain and Italy.”
With over 2 million customers under its belt, Kent said the ambition now is to multiply that user base to 10 or 20 million over the next few years.