Lightnet, a Bangkok-based blockchain fintech, raised $31.2 million in a Series A round led by UOB Venture Management, Seven Bank, Uni-President Asset Holdings, HashKey Capital, Hopeshine Ventures, Signum Capital, Du Capital and Hanwha Investment and Securities.
The round was significant as Lightnet received financial backing from six major conglomerates in Asia. The company is building a blockchain payments system for low-cost and fast remittances in South East Asia.
The platform leverages the Velo Protocol, which enables digital credit issuance and cross-border asset transfers. Users of Lightnet can effectively transfer money by converting it to a Velo token, which is then transferred to the recipient and turned back into the local currency.
Velo is based on the Stellar blockchain protocol, and according to Velo’s blog, Stellar founder Jed McCaleb is an investor and on the governance council. The leaders of the Velo team and the Lightnet team are more or less the same.
The current remittance system is quite reliant on the SWIFT messaging protocol. Banks effectively act as the gateway to SWIFT, and some money transfer companies struggle to pass stringent Anti Money Laundering processes. Also, due to a multihop system which involves several parties, the costs of transferring money is significantly higher.
Lightnet is targeting the migrant workers in South East Asia by enabling a real-time settlement system to provide a foreign exchange with lower overhead costs. It estimates this market is worth about $150 billion.
According to the World Bank, low and middle-income regions such as East Asia and the Pacific, and South Asia (including India), saw remittance flows of $143 billion and $132 billion respectively in 2018. These volumes are much higher compared to other low- and middle-income regions.
“We launched Lightnet to offer low-cost and instantaneous financial inclusivity and mobility to the four billion lives across Asia Pacific — all powered by Stellar’s fast, scalable, and sustainable blockchain technology,” said Chatchaval Jiaravanon, Chairman of Lightnet.
Jiaravanon is the co-founder of Lightnet and says he is a family member of the Charoen Pokphand Group, Thailand’s largest conglomerate. The other co-founder is Tridbodi Arunanondchai, a former investment banker.
“We project that within three years, Lightnet will facilitate over $50 billion worth of annual transactions through our industry-leading partner network,” said Arunanondchai, Vice-Chairman of Lightnet.
Meanwhile, Lightnet CEO Suvicha Sudchai was head of Innovation for Krung Thai Bank for a year and before that was head of IT Strategy at Siam Commercial Bank where he spent five years.
According to the CEO, the main platform is complete, and the first transaction is scheduled in the coming months. The plan is to integrate with other payment and remittance partners such as MoneyGram, and Seven Bank across Japan, South Korea, and several other South-East Asian countries.
Among other similar initiatives in the region, UnionBank of the Philippines and Singapore’s OCBC Bank carried out a pilot for blockchain remittance to the Philippines.
Last week, Thailand’s Siam Commercial Bank rolled out its Ripple powered app for cross-border payments.