Investment Memo: 8 Reasons 8 Decimal Invested in SendFriend

By: Kadeem Clarke, Investment Manager

1. Team

SendFriend has a strong team for many reasons. The CEO, David Lighton, has a strong background in the remittance space based on his financial inclusion work for the World Bank in Haiti and blockchain experience from MIT Media Lab paired with an understanding of the complex legal environment associated with the space. Joel Kosloski, the CTO, has 13 years of experience within the remittance space at multiple companies. Most recently, Joel served as Senior Director, Enterprise Architecture & Chief Enterprise Architect at MoneyGram (the second largest company in the payment remittances space). CRO David Anderson is leading the go-to-market efforts, having originally met David L. in class at Harvard Business School. Overall, the entire team has experience from a technology perspective in the remittance space as well as the industry in general.

2. Why Blockchain?

SendFriend leverages blockchain technology to reduce the cost of global remittances for the millions of migrant workers who overpay for international money transfer as a result of friction in the banking system. Current incumbents, such as Western Union, Xoom, MoneyGram, and Remitly, all use a combination of SWIFT, correspondent banks and foreign exchange houses for international FX transfers. Instead, SendFriend uses blockchain. SendFriend sends money quicker and cheaper than its competitors. SendFriend has recently partnered with Ripple for the US-Philippines corridor, along with a partnership with Coins.ph for distribution. Blockchain offers superior speed and transparency for the processing of international payments and SendFriend will be the first US company to bring this benefit to consumers in a compliant fashion.

3. Timing

Oftentimes, businesses in the blockchain space struggle with timing. If current technology is not fully developed to support their application, then the business won’t be successful. However, the timing for SendFriend is right, all of the infrastructure to conduct remittances using blockchain is already developed.

4. Other Investors

SendFriend will benefit from the network effects produced by their two most notable supporters, the Barclays Accelerator powered by Techstars and Ripple. SendFriend was among 10 startups selected from over 750 applicants for the Barclays Accelerator powered by Techstars program, during which SendFriend was able to secure funding. Not only is SendFriend the only US-Philippines launch partner for Ripple’s xRapid, but Ripple is supporting SendFriend’s go-to-market efforts in the form of a $1 million incentive. 8 Decimal intends to provide SendFriend with advice, potential partnerships, and access to a wide network in the US and Asia as SendFriend’s business expands. Additionally, we will provide consultation and support for marketing and community outreach. Other notable investors include 2020 Ventures (an investor in Chain, Circle, and Ripple), Lytical Ventures, and angel investors.

5. Valuation

We can’t go into too much detail about this, but the price is right.

6. Unicorn Potential

In order to become a unicorn, a company must have a sustainable business model, that generates multiple streams of cash flow, operating in a large market. We firmly believe that SendFriend demonstrates these characteristics. They have a good combination of an experienced team, large $650 billion remittance market, and investors that provide more than just capital. SendFriend’s growth strategy is focused on revenue from transactions, APIs, and white-label solutions.

7. Marketing Strategy

Their integrated marketing approach will reach consumers already sending money online, and consumers who currently send cash only, offline. This will be done by accessing tight-knit Filipino communities through grassroots campaigns, events, co-branding, and partnerships.

8. Competition

This is a highly competitive space with longtime incumbents. However, SendFriend has built strong partnerships along its supply chain, while developing a foundation to significantly minimize friction in the system. SendFriend’s size could prove to be an asset as the incumbents will have a hard time following since they risk self-disruption and high switching costs. It is important to note that this is such a large market that there can be multiple winners. For example, 1% of just the US-PHP corridor would represent $400 million being transferred.

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8 DECIMAL CAPITAL is a multi-strategy investment firm focusing on token and equity investments. 8 Decimal currently has more than 40 portfolio companies with an AUM of 60M USD. The investment team consists of more than 10 venture capital veterans, researchers, and trading professionals. The advisory board comprises Fan Zhang (Former Founding Partner of Sequoia Capital China), Karen Chen (Former CEO of UBS China) and Ben Bartlett (Vice Mayor of Berkeley). Based on the professional fund index ranking agency Token Metrics, 8 Decimal was ranked second out of the 51 active crypto funds. 8 Decimal is also well-received in China, named one of the top 10 funds in the blockchain industry by both 36氪（36Kr.com）, Chain Capture , and Odaily, as well as named one of the top 20 funds by Tsinghua X-Lab and Youth Education Chain League.