Airwallex raises $200M at a $4B valuation to double down on business

Businesses, now more than ever, are going digital, and today a startup building an integrated integrated solution to meet business banking needs is announcing a massive round of funding to take advantage of the opportunity. Used to be. Airwallex – which provides business banking services directly to businesses themselves, as well as through a set of APIs that power other companies’ fintech products – has raised $200 million, a Series E round of funding that will help Australian Values ​​the startup at $4 billion.

Lone Pine Capital is leading the round, with new backers G Squared and Wetamer Capital Management, and previous backers 1835i Ventures (formerly ANZi), DST Global, Salesforce Ventures and Sequoia Capital China also participating.

The funding brings the total raised by Airwallex – which has head offices in Hong Kong and Melbourne, Australia – to $700 million, including a $100 million injection, which closed its Series D just six months ago .

Airwallex will use the funds to continue investing in its product and technology, as well as to continue its geographic expansion and focus on some larger business goals. The company has started to make some progress in Europe and the UK and will be a big focus with the US

The quick succession of funding, and this rising valuation, underscores Airwallex’s traction to date in what CEO and co-founder Jack Zhang describes as a vertically integrated strategy.

Which includes two parts. Firstly, Airwallex has built all the infrastructure for business banking services that it provides directly to businesses, focusing on small and medium enterprise customers. Second, it has packed that infrastructure into a set of APIs that many other companies use to provide financial services directly to their customers without the need to create those services – the so-called “embedded finance” approach.

“We want to own the whole ecosystem,” Zhang told me. “We want to be like the Apple of trade finance.”

It seems to be working for Airwallex so far. Revenue for the first half of 2021 was up nearly 150% compared to a year earlier, with the company processing more than US$20 billion for a global client portfolio that has quadrupled in size. In addition to thousands of SMEs, it provides financial services, via APIs, to other companies such as GOAT, Papaya Global and Stake.

Airwallex got its start like many of the strongest startups: it was created to solve a problem the founders themselves faced. In the case of Airwallex, Zhang told me that he was actually working on a previous start-up idea. He wanted to build Asia’s “Blue Bottle Coffee” out of Hong Kong, and that involved buying and importing a lot of different materials, packaging, and of course, coffee from around the world.

“We found that making payments as a small business was slow and costly,” he said, as it involved banks in different countries and different banking systems, manual efforts to transfer money between them and to clear payments. many days. “But that was also my background – payments and business – and so I decided it was a more lucrative problem for me to work on and solve.”

The coffee effort eventually followed Zhang, one of his co-founders, along with four of Airvolex’s co-founders, Jijing Dai, Lucy Liu, and Max Li.

It was 2014, and Airwallex quickly garnered attention from VCs for being in the right place at the right time. A wave of startups building financial services for SMBs was certainly taking hold in North America and Europe, filling a long-neglected hole in the technology universe, but almost nothing like it in the Asia Pacific region. was, and in those early days the solutions were highly regionalised.

From there it was a no-brainer that the first thing Airvolex encountered, starting with cross-border payments, would soon evolve into a broad suite of banking services involving payments and other cross-border banking services.

“Over the past 6 years, we have built over 50 bank integrations and now offer payments in 95 countries through a partner network,” he said, 43 of which offer real-time transactions. From that, it moved on to bank accounts and “other primitive stuff” with card issuance, he said, eventually creating an end-to-end payment stack.

Airwallex has thousands of customers using its financial services directly, and they make up about 40% of its revenue today. Other interesting twist The company has decided to expand its business.

Airwallex had built all of its technology from the ground up, and it found that – watching a wave of new companies looking for more ways to connect customers and become their one-stop shop – put that technology into one. Had the opportunity to package. Set of APIs and sell to a different set of customers, who have also provided services for small businesses. That portion of the business now accounts for 60% of Airwallex’s business, Zhang said, and is growing rapidly in terms of revenue. (The SMB business is growing rapidly in terms of customers, he said.)

A lot of embedded finance startups that base their business around building tech to power other businesses shy away from providing financial services directly to consumers. The explanation I’ve heard is that they don’t want to compete against their customers. Zhang said Airvolex takes a different approach by being selective about the customers they partner with, so that the financial services they provide are never the kind that aren’t in direct competition. The GOAT marketplace for sneakers, or Papaya Global’s HR platform, are excellent examples.

However, as Airwallex continues to grow, you can’t help but wonder if one of those partners might choose to grab Airwallex and take on some of that service provisioning role themselves. In that context, it is very interesting to see Salesforce Ventures return to invest even more in the company in this round, given that the company has provided a vast array of cloud services from its early roots to a single platform for salespeople. to be widely expanded. Help people run their business.

For now, it’s been the combination of its unique roots in Asia Pacific, as well as its vertical approach to taking its technology off the ground, as well as its retail prowess that has impressed investors and could well see that Airwallex remains independent and evolves for some time to come. .

“Airwallex has a clear competitive advantage in the digital payments market,” David Craver, MD, Lone Pine Capital, said in a statement. “Its unique Asia-Pacific roots, along with its innovative infrastructure, products and services, speak to the business’s global growth opportunities and its impressive expansion into the competitive payment provider space. We are looking forward to investing in Airwallex at this dynamic time. We are excited to, and look forward to helping drive the company’s expansion and success around the world.”

Related Posts

error: Content is protected !!