Deals | (Updated) Tencent and Sequoia-backed cross border payments firm Airwallex closes $80m Series B

Airwallex can now loosen its purse strings, with plans like a Southeast Asian expansion in mind

By Elaine on Tue Jul 03 2018

  • Latest funding round brings the total investment amount to $102 million
  • Airwallex to strengthen its grip on Southeast Asia, acquire virtual banking license in Hong Kong
  • Backers include Tencent, Sequoia, Horizons Ventures and others.

Australia-based cross-border payments firm Airwallex has closed its Series B round with $80 million in funding to expand operations globally and provide a more comprehensive range of end to end solutions.

Founded in 2015, the backers of its latest round include Chinese Internet services giant Tencent, investment firm Sequoia China, Hillhouse, Horizons Ventures, Central Capital Ventura, and Square Peg.

The startup previously received $3 million in a pre-Series A investment round led by Gobi Partners, $13 million in a Series A round from Tencent and Sequoia, and an additional $6 million in a Series A+ round with Square Peg Capital.

Lucy Liu, Co-founder, Airwallex

Lucy Liu, Co-founder, Airwallex, said in a statement, “In providing these solutions, we intend to shake up the industries we’re playing in. We’re creating better, more cost-effective one-stop-shop solutions using technology delivered around the world.”

Currently, its flagship product is a foreign exchange engine that allows businesses to secure a 24-hour fixed rate, which reduces the volatility of market fluctuations.

Enterprises will also get access to wholesale comparable rates. Airwallex also provides its clients with the ability to choose same-day payments and select currency pairings, and move their money in and out of 50 countries.

Liu added, “Our end game is to provide the global network required for businesses to scale globally and take advantage of the digital and online opportunities that exist when you’re transacting in multiple markets.”

At the moment, its customers span across various sectors: banks and financial corporations; international online commerce outlets; online travel agents; education; logistics; e-marketing; and social networking.

One use case would be an e-commerce vendor selling in a Chinese marketplace, for example, to a random buyer in Indonesia. Since they are dealing with different currencies, the company allows a fixed foreign exchange rate that will appease both buyer and seller with a sense of transparency.

The company’s CEO Jack Zhang told 36Kr, our parent company, in an interview that there are many countries outside of China that do not require the company to be a bank in order to take part in a clearing process.

For reference, Zhang noted that even though there are around 130 banks in Indonesia, there are only four clearing organisations each covering around 30 to 40 banks. Due to that, financial companies must join all of them to meet the needs of their customers, and thus, Airwallex has built up a sizeable global clearing network to save companies the trouble of joining multiple clearing houses.

Neil Shen, Founding and Managing Partner, Sequoia China, said, “As the pace and connectivity of the digitalized global economy continue to rapidly accelerate, the need to focus on foreign exchange and payments has become critically important for large corporates and [small and medium enterprises] SMEs.”

Going forward, the firm will look to strengthen its grip on Southeast Asia, with an aggressive hiring strategy underway in Singapore, having added product and business development roles in the island nation the last few months.

Meanwhile, Airwallex is also applying for a virtual banking license in Hong Kong, alongside many other companies looking to operate as an online financial institution. According to SCMP, virtual banks must provide customers with a way of complaining in person, and must have an exit plan.

 

Q&A with the company’s founders below:

(Answers have been edited for brevity and clarity)

 

Within Southeast Asia, which are your biggest markets and why?

Singapore

Currently, Singapore is a focus for us but market size isn’t the only reason that it’s big for us.

Singapore is not only centrally located, but the maturity of the market and the stability of the existing infrastructure means it is a rich environment for innovation and entrepreneurship to take place and acts nicely as a hub for exposure to the other markets.

These ‘other markets’ are Southeast Asian markets that will be huge for us, partly because there is massive commercial opportunity and hence we will aggressively look to expand there, and partly because they’re all considered emerging markets that have a growing demand for foreign exchange and payments solutions, with only limited or fractured solutions available to them currently.

They are the following markets (not in any particular order) Indonesia, Vietnam, Thailand, Malaysia, Taiwan, and the Philippines.

Can you share more on the “dream factory model” (a term used by Liu) and how it will be carried out?

The dream factory model is a turn of phrase that we apply internally when we focus on how we can provide game-changing full end-to-end solutions to the market.

We know many companies dream of taking their businesses to the global stage, but payments and foreign exchange barriers often hold them back. By continually improving our offering, and building a comprehensive solution set for our clients, it will no longer be an unreachable dream for them to succeed in the hyper-competitive global business arena.

What is Airwallex’s competitive advantage/unique selling point?

There are a few ways we set ourselves apart. We actively focus on the differentiators to focus our resources, attention and being true to servicing our clients first and foremost.

Being accessible: while other tech-based platforms can require broad participation to work, we deliver an accessible solution that delivers immediate results. Our technology isn’t layered with a number of external dependencies – it’s more of a plug and play option delivering speed to market for immediate results for clients.

Comprehensive coverage: we’ve deliberately focused on building an extensive partnership network to cover all routes and regions that our customers need because when we say we international payments for all corners of the globe we mean it. We work tirelessly to connect all digital end-points in the world to make international payments as simple and quick as a local payment.

Live feed, screen capture from Airwallex.com

Working in partnership: in the true sense. We don’t simply sell products to our clients to implement and forget. We integrate our clients into a partner model – knowledge sharing and consulting to help remove payment barriers ensuring companies can open up new markets and accelerate their global footprint for sustainable and profitable growth.

Keeping this in mind we collaborate with banks and investors – utilising their infrastructure and resources to expedite the creation of a global digital network. We work to enable better results – not disrupt for the sake of disruption or fame.

Adaptable end-to-end: no client will be able to implement a single product and find all of their foreign exchange and payments issues are solved. This is precisely why our solution suite is built with a focus to be a one-stop-shop to solve all of the foreign exchange and payment problems for our customers, with an ability to throttle up and down at various points as and when needed.

How do you see the future of cross-border payments?

The succinct way to describe this is overall more integration and more connectivity. The distinction between online and offline activity will become less defined. APAC, the UK and the US will all start to integrate and connect more seamlessly. We know we need to re-imagine how foreign exchange and payments work globally because we think the level of integration across all touchpoints will continue to become more and more connected.

What is Airwallex’s biggest challenge post-funding?

Recruitment has always been difficult for us and this will only become more acute post-funding. The pace at which we want to build a highly effective global team is going to be challenging, and beyond sourcing the right people with the same drive and determination we then need to ensure we stay aligned as a team. Communication is critical for any business and even more so when you accelerate and grow so rapidly – as we have done and will continue to do!

How many employees do you have in each office?

We have 120+ employees globally with the Shanghai office now hosting the largest team with 50 per cent of employees based there. The second largest would be Melbourne with 30+ employees and the rest spread across the UK, Hong Kong and Singapore.

This article has been updated to include Q&A interviews with the company.

Editor: Ben Jiang