Airwallex raises $100M to energy cross-border enterprise banking, valuation stays flat at $5.5B

The economic system could also be exhibiting many indicators of contraction proper now, however many corporations nonetheless have to do enterprise internationally. Now a startup offering the instruments to make and handle these transactions is saying some funding. Airwallex, the Hong Kong/Australia startup that gives cross-border banking and different monetary providers for companies, has raised $100 million, cash that it will likely be utilizing to proceed increasing its enterprise operationally, geographically and with new merchandise in areas like credit score and expense administration; and for M&A.

The funding is coming within the type of an extension to Airwallex’s Series E — technically a Series E-2, after a $100 million extension in November 2021, and the unique $200 million in September 2021. It is usually an inside spherical with earlier backers Square Peg, Salesforce Ventures, Sequoia Capital China, Lone Pine Capital, Hermitage Capital, 1835i Ventures and Tencent all taking part; Australian fund HostPlus and an unnamed “leading North American pension fund” additionally invested.

Jack Zhang — Airwallex’s CEO who co-founded the corporate with Xijing Dai, Lucy Liu and Max Li — instructed Thealike that enterprise has been on the up within the final yr. The firm’s revenues have grown by 184%, ARR handed $200 million in September, and it’s processing near $50 billion in annualized transactions, he mentioned. Customer numbers have doubled though it solely describes the determine as a imprecise “tens of thousands” of companies (they embody Papaya Global, HubSpot, Plum, GOAT and others).

And but, given the present financial local weather, this spherical was not with out its struggles. Namely, it’s coming in at a flat valuation of $5.5 billion, stage with what Airwallex achieved a yr in the past, when the valuation catapulted $1.5 billion within the area of some weeks.

“It’s been a more challenging environment to raise money,” Zhang mentioned. He and others on the workforce may see what was coming across the nook earlier within the yr, he added, and though Airwallex nonetheless had vital cash within the financial institution — $600 million out of the full $900 million raised as of the top of September, when Zhang and I spoke — the startup selected to boost extra, simply in case.

“Last year it took two weeks to raise $100 million,” he mentioned of the earlier fundraise. “This year it took four months. We think it was a good outcome that we were able to raise the money at all.” Last time we coated the corporate, I famous that Airwallex was going into its Series E extension having fended off two acquisition presents from fast-growing fintechs. I ponder if traders (or Airwallex itself) ask themselves if selecting to remain impartial was the proper alternative.

In the meantime, the corporate continues to develop its personal platform by itself steam. Airwallex’s core focus at the moment is on two areas. Business banking covers banking accounts, cash switch, fee playing cards, bills administration and B2B fee hyperlinks. And its platform product is a set of embeddable monetary providers that clients combine into their very own platforms or web sites by means of APIs to energy experiences for themselves and their very own clients. These embody on-line funds, treasury providers to retailer and handle funds internationally, international alternate to energy pricing internationally, payouts and card issuing.

Airwallex, as we’ve written earlier than, made a splash when it was first based by doing the proper factor on the proper time: it did the powerful work of integrating with numerous banks and constructing complicated monetary providers after which made them simple to make use of (leaning on APIs) in order that corporations doing enterprise throughout nation boundaries may arrange banking and cash shifting providers rapidly, initially out of Asia Pacific and finally globally.

“In the last six years, we’ve built more than 50 bank integrations and now offer payments across 95 countries, payments through a partner network,” Zhang instructed me again in 2021. From that, it moved on to financial institution accounts and “other primitive stuff” with card issuance and extra, he mentioned, finally constructing an end-to-end fee stack.

That enterprise noticed an enormous surge in demand (and valuation) within the midst of the Covid-19 pandemic, when — within the absence of in-person exercise and folks finishing up extra features of their work and leisure life on-line — companies that had been already digital noticed transactions undergo the roof; and those who had been extra targeted on the offline world pre-pandemic discovered themselves needing to take a pointy digital flip.

The large query extra not too long ago — each for Airwallex and the various different corporations prefer it similar to Stripe, PayPal, Revolut and lots of extra — has been whether or not these shifts would stay because the world slowly reverted again to pre-pandemic habits and processes. Airwallex’s progress appears to level to extra alternative forward, though not on the charges that it could have projected a yr in the past.

Its most lively markets in the present day are China, the UK and North America, Zhang mentioned, and the plan is to proceed increasing in particular international locations with notably robust addressable markets. Israel is a kind of international locations, since nearly each enterprise there with a digital angle has worldwide operations to increase outdoors of their small house market — “Every single startup there is a potential customer!” Zhang exclaimed, including that it’s additionally a hotbed for potential acquisition targets, particularly proper now, because it’s change into way more difficult for smaller corporations to boost rounds.

One space, for instance, the place Israel is powerful, and Airwallex at the moment doesn’t have a local answer, is within the space of fraud safety.

“I’m super interested in that space form an M&A perspective,” Zhang mentioned.

Separately to constructing its personal enterprise and pursuing acquisitions to increase inorganically, Airwallex’s founders have been additionally constructing out one other enterprise to gas its enterprise progress, an funding fund. Capital 49, because it’s referred to as, was launched again in July 2021. Unlike different funds geared toward increasing a product’s ecosystem just like the Alexa Fund at Amazon or the Slack Fund, Capital 49 just isn’t operated off Airwallex’s stability sheet, as an alternative tapping quite a few Airwallex’s traders as LPs however utilizing Airwallex’s data of the market to information it.

“We have accumulated a deep knowledge of fintech and SaaS,” Zhang mentioned, and backing fascinating startups in these classes powered by Airwallex’s infrastructure “is the primary goal of the fund.”