Finding the Right Market

Louis-Antoine Muhire, is a Rwandan who made a new life in Canada as a Police Intelligence Officer. However, in spite of his success there, he decided to return to Rwanda to build a better remittance system, inspired by his own frustration sending money back home.

After three years of work, his company, Mergims, has now raised 4 rounds of funding and is valued at 5 million US dollars. This is how he came up with the initial idea and decided which available markets he could target:

I was living in Canada and starting to send money back to my relatives to pay essential services, but every time I used a traditional remittance system like Western Union or Moneygram, I had to pay a lot of service fees and it was very expensive, not convenient, you had to line up and file the paper. At the same time, here, my cousins had to pay the transfer costs.

I got tired of that stress, I said, you know what, I need to do something that will connect me to the institutions that I want to pay for my cousins. So it came out of my frustrations. I realized I wasn’t the only one, most migrants in North America have the same issues as me. I went to see my friends in Canada from the Philippines, they have the same problem, from Latin America, they have the same problem.

The first move was to evaluate the market. Because yes, I had my problem, but to finance such a technology takes a lot of money. So right away I realized I would have to have a large number of users to make it possible. It’s a 500 Billion USD industry worldwide when migrants send money back to relatives

And as far as Africa, it’s 60 Billion, and then, for the East African regions where we started, it’s 3 Billion Dollars coming from outside to Rwanda. So right away I said, you know what? There’s a way to make a viable business if there’s such a huge amount of money going there and nobody seems to have taken care of my problem. Those were the easiest numbers to find because the World Bank has all those reports about how much money is coming in remittances. So you read a lot of reports and that’s how I got all those numbers.

I was convinced that someone really has to do something about this problem. My first question was, to make it viable, how many people in Rwanda send money to their relatives? That was the small market that I can really start with. It doesn’t mean it’s profitable. It’s called SME, so the servicable available market, that the market where you can start with whatever you have. That was Rwanda.

And I look if my technology is to serve more people in East Africa, how big will the market be? That’s what they can call the segmented obtainable market, SOM. So then, it’s 3 billion of dollars coming outside to East Africa. You have to start somewhere small, the SOM, the serviceable obtainable market, what you can obtain with whatever you have, the little chaotic beta version you have. Where can you work? It was Rwanda, 200 million, this year we are starting to go in Kenya and Uganda, so 3 billion we’re targeting.

The first one is TMA, Total Available Market, so the 500 billion, then there’s segmentable obtainable market, that’s East Africa, and the serviceable available market, so that’s Rwanda. It’s SAM, East Africa is SOM, segmented obtainable market, the total available market worldwide is 500 billion.