An international payments startup wants to save some of the hardest workers in Chicago money on a daily, weekly and monthly basis, according to Nick Cavet, co-founder and CEO of CFX Labs.
The company enables users to move money instantly across borders from network-affiliated brick-and-mortar locations in the United States such as CVS and Walgreens.
The startup announced a $9.5 million seed round this week with support from Decasonic, Kraken Ventures, Shima Capital, Corazon Capital and CMT Digital, among others.
Cavet said a typical user of the platform is often someone from a Mexican migrant family working a blue-collar job in something like food service, lawn care or construction, who sends a large portion of their earnings each year home to their family members in Mexico.
"Oftentimes these are folks who are earning their wages in cash, and we have the ability to essentially take a cash deposit at a point of sale at a CVS or Walgreens and put that on a [digital] wallet for them," Cavet told the Chicago Business Journal. "Our technology provides a way for somebody who's made $100 a day to send some money to their wife, brother, sister or whoever. When they do that cash deposit, it's going to land in 45 seconds and put that money in [their relative's] account in Mexico."
CFX Labs' platform charges zero fees for cash deposits and domestic P2P transfers. The company makes money when those assets are moved outside of its network to a local bank account, sharing 51% with its brand partners.
Cavet said the startup was more like a private version of JPM Coin, JPMorgan's blockchain-based system, than it was like bitcoin because CFX partners with a regulated financial institution using digital dollars at banks instead of coins coming out of computer algorithms.
He added that they have 10 times as many cash deposit locations as Chase through their partnership with Green Dot Bank.
Whom CFX helps
While Cavet acknowledges CFX isn't necessarily addressing a problem that affects most white-collar workers, it is a problem affecting the working class.
"These are the people that are mowing their lawns and watching your kids while you're at work. They're the ones that are delivering your Grubhub orders and relying on tips," he said.
One in seven people rely on remittances, according to the Chicago-based startup — a term that describes a sum of money sent by someone working abroad to their family back home. The average cost of sending a remittance from the United States to other countries was 5.41% last year, according to the U.S. Federal Reserve.
CFX Labs wants to make that process — which can be plagued by high costs, slow settlements and limited accessibility — easier.
With a founding team member that includes Matt Dixon, a former professor at the University of Illinois Chicago, CFX Labs has deep roots in the city, and Cavet wants to demonstrate how the startup ecosystem can thrive in Chicago.
"From a regulatory perspective, New York has always been in the equities market. Chicago has long had a history of commodities trading, and for digital asset commodities it's the best place to do it because people have been doing it in other forms for the last 100 years," he said.
With a network that's currently accessible to 360 million users, CFX plans to expand B2B2C access to 1.2 billion people by 2024.
