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Airwallex Raises $ 200 Million at $ 4 Billion Valuation to Double Business Banking – TechCrunch

Businesses are going digital more than ever before, and today, a startup that is building a vertically integrated solution to meet business banking needs is announcing a major fundraiser to seize this opportunity. Airwallex – which provides business banking services directly to the businesses themselves, as well as through a set of APIs that power the fintech products of other businesses – has raised $ 200 million, a Series E funding round that values the $ 4 billion Australian startup.

Lone Pine Capital leads the round, with new backers G Squared and Vetamer 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 headquarters in Hong Kong and Melbourne, Australia – to date to $ 700 million, including a $ 100 million injection that closed its Series D there. is barely six months old.

Airwallex will use the funding both to continue to invest in its product and technology, as well as to continue its geographic expansion and focus on larger business targets. The company has started to make headway in Europe and the UK and that will be one of the main targets, along with the US.

The rapid succession of fundings and this growing valuation underscore Airwallex’s pull to date around what CEO and co-founder Jack Zhang describes as a vertically integrated strategy.

It involves two parts. First, Airwallex has built all the infrastructure for corporate banking services that it provides directly to businesses with a focus on small and medium businesses. Second, he bundled that infrastructure into a set of APIs that a variety of other companies use to deliver financial services directly to their clients without needing to create those services themselves – the so-called “integrated finance” approach. “.

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

It seems to be working so far for Airwallex. Revenue increased nearly 150% for the first half of 2021 from a year earlier, with the company processing more than US $ 20 billion for a global client portfolio that quadrupled in size. In addition to tens of thousands of SMEs, it also powers financial services through APIs for other companies like GOAT, Papaya Global and Stake.

Airwallex got its start like most of the strongest startups do – it was designed to solve a problem that the founders themselves encountered. In the case of Airwallex, Zhang tells me that he actually worked on a previous start-up idea. He wanted to build Asia’s “Blue Bottle Coffee” from Hong Kong, and that involved buying and importing many different materials, packaging and of course coffee from all over the world.

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

Eventually, one of his coffee effort co-founders arrived, with Airwallex’s four co-founders ultimately including Zhang, as well as Xijing Dai, Lucy Liu, and Max Li.

It was 2014, and Airwallex caught the attention of VCs early on, in part because it was in the right place at the right time. A wave of startups creating financial services for SMEs was definitely gaining traction in North America and Europe, filling a long overlooked gap in the tech world, but there was hardly any such thing in the Asia-Pacific region. , and at the time the solutions were very regionalized.

From there, it was obvious that by starting with cross-border payments, the first thing Airwallex tackled, it would soon become a wider range of banking services involving cross-border payments and other banking services.

“Over the past 6 years, we’ve built over 50 banking integrations and now offer payments in 95 countries through a network of partners,” he added, with 43 of them offering real-time transactions. From there he moved on to bank accounts and “other primitive stuff” with issuing cards and more, he said, ultimately creating an end-to-end payment stack.

Airwallex has tens of thousands of customers who directly use its financial services, and today they represent approximately 40% of its revenue. The rest is the interesting turn that the company has decided to take to develop its activities.

Airwallex had built all of its technology from scratch itself, and it found that with the wave of new companies looking for new ways to engage customers and become their one-stop-shop, there was an opportunity. to bundle that technology into one set of APIs and sell it to another set of customers, those who also provided services to small businesses. That part of the business now accounts for 60% of Airwallex’s business, Zhang said, and is growing faster in terms of revenue. (SME business is growing faster in terms of customers, he said.)

Many integrated finance startups that base their business on building technology to power other businesses tend to stay away from providing financial services directly to consumers. The explanation I’ve heard is that they don’t want to compete with their customers. Zhang said Airwallex takes a different approach, being selective about the clients they partner with, so the financial services they offer are never the kind that don’t compete directly. The GOAT marketplace for sneakers or the HR platform of Papaya Global are classic examples.

However, as Airwallex continues to grow, you can’t help but wonder if any of these partners would like to swallow up all of Airwallex and take on a part of this service delivery role themselves. In this context, it is very interesting to see Salesforce Ventures return to invest even more in the business in this cycle, given how the business has grown from its early roots in software for vendors to a platform. – massive form providing a wide range of cloud services to help people run their businesses.

So far, it’s the combination of his unique roots in Asia-Pacific, his vertical approach of building technology from scratch, and his keen sense of retail that has impressed investors and may well see Airwallex remain independent and grow for some time to come. .

“Airwallex has a clear competitive advantage in the digital payments market,” David Craver, managing director of Lone Pine Capital, said in a statement. “Its unique roots in Asia Pacific, coupled with its innovative infrastructure, products and services, speak volumes about the company’s global growth opportunities and its impressive expansion into the competitive payment provider space. We are delighted to invest in Airwallex at this dynamic time and look forward to contributing to the company’s expansion and success around the world.