Kenya-based bitcoin services provider BitPesa has raised $1.1m as part of a new funding round led by hedge fund Pantera Capital.
Additional participants in the round included VC firms Bitcoin Opportunity Corp, Crypto Currency Partners, Future/Perfect Ventures and Stephens Investment Management.
BitPesa CEO Elizabeth Rossiello explained that funding comes at a time when the nine-member team is still evolving its core services and seeking to identify the target consumers for whom the offering will be most appealing.
The service currently enables the exchange of bitcoin for Kenyan Shillings, and allows users in Kenya and Ghana to send fiat funds to popular mobile money wallets.
Rossiello told CoinDesk
“We’ve had our heads down building a solid product, and now we’re hiring to grow. A big part of that is expanding our team to help us grow in other markets where we see the demand.”
Investors see this big-picture vision as well, with Crypto Currency Partners managing partner W Bradford Stephens suggesting that BitPesa is part of a broader trend to position bitcoin as an enabler of financial inclusion.
“The blockchain doesn’t just enable financial services to four billion of the ‘unbanked’ in developing countries, it connects them to the globalized online economy,” Stephens said.
BitPesa plans to use the funding to expand its service to Tanzania and Uganda in the first quarter of 2015, and expects to launch a revamped website in the coming weeks.
The company officially launched in November 2013, entered beta in May 2014 and opened its alpha this past summer.
The funding coincides on with the publication of a blog post that finds the company looking back on its first year-plus of operations and discussing its findings regarding how successful its bitcoin solution is proving in the African market.
Notably, Rossiello indicated that, as a service that aggregates payments from around the globe, BitPesa’s success is influenced, and in some ways hindered, by the current size of the wider bitcoin network and availability of on-ramps to that ecosystem.
“We’ve seen a huge uptick where it’s easy and cheap to get bitcoin, and we’ve seen slower uptake where people don’t have that access. That’s the biggest finding over the year,” Rossiello said.
Rossiello suggested that bitcoin as a money sending tool is currently not competitive everywhere, and that BitPesa intends to focus on identifying markets where such an offering can compete.
As an example, she cited the UK as a problematic market that has required increased marketing investment due to the struggles the country’s bitcoin businesses have had securing bank accounts. When BitPesa launched, it was initially focused solely on the UK-Kenya remittance corridor.
Winning small businesses
While often framed as a bitcoin remittance service, Rossiello suggested that BitPesa is primarily used today by small business owners in the UK who have links to East Africa.
“Remittance is defined as a monthly subsidy from one family member to another in their home country,” Rossiello said. “The image in our head is one of subsidizing real income. We don’t necessarily see that as much.”
Rossiello said that consumers are using the service, however, but as a way to send larger amounts for non-essential purchases such as gifts and presents.
Still, she said the service is proving popular, a development she ties to the firm’s emphasis on customer service and building relationships with users.
“We have a really high retention rate, customers that were just doing bitcoin to shillings are now doing both way trades, so we really see people like the service that we offer,” Rossiello added.
BitPesa earns 3% off transfers from bitcoin to Kenyan Shillings, but does not charge transfer fees.
Encouraging international use
The news also comes during a broader shift in tone from the bitcoin industry, with a some of its more public figures seeking to highlight that bitcoin today is most competitive in developing markets.
Investors, the funding round suggests, may be increasingly keen to provide assistance to the startups exploring this vertical, with Bitcoin Opportunity Corp’s Barry Silbert citing both remittance and mobile money as “leading bitcoin use cases”.
“I’m very proud of the team and am thrilled to bring on the new investors to support BitPesa’s growth and expansion plans,” Silbert said.