Airwallex raises $100 million to power cross-border business banking, valuation stays the same at $5.5 billion TechCrunch

The economy may be showing signs of slowing down right now, but many companies still need to do business internationally. Now, a startup that provides the tools to execute and manage those deals is announcing some funding. Airwallex, a Hong Kong/Australian startup that provides cross-border banking and other financial services to businesses, has raised $100 million, which it will use to continue opening expand the business in terms of operations, geography and with new products in areas such as credit and expense management; and for mergers and acquisitions.

The funding is coming in the form of an expansion to Airwallex’s Series E – technically a Series E-2, after a $100 million extension in November 2021and the initial $200 million in September 2021. It was essentially an inside round with previous backers Square Peg, Salesforce Ventures, Sequoia Capital China, Lone Pine Capital, Hermitage Capital, 1835i Ventures and Tencent all participating; Australian fund HostPlus and a “leading North American pension fund” have also invested.

Jack Zhang – CEO of Airwallex who co-founded the company with Xijing Dai, Lucy Liu and Max Li – told TechCrunch that the business has been going up in the last year. The company’s revenue grew 184%, the ARR crossed $200 million in September, and it is processing nearly $50 billion in transactions annually, he said. The number of customers has doubled, though it describes the number only as a vague “tens of thousands” of businesses (they include Papaya Global, HubSpot, Plum, GOAT, and others).

However, given the current economic landscape, this round is not without its difficulties. Specifically, it is at a fixed valuation of $5.5 billion, the level of what Airwallex achieved a year ago, when the valuation hit $1.5 billion over a period of several weeks.

“It’s a more challenging environment to raise money,” says Zhang. He and the rest of the team can see what’s coming at the start of the year, he added, and although Airwallex still has a significant amount of money in the bank – $600 million out of a total of $900 million. raised as of late September, when Zhang and I talked – the startup chose to raise more, just in case.

“Last year, it took two weeks to raise $100 million,” he said of the previous fundraiser. “This year took four months. We thought it was a good result that we were able to raise the amount. “Last time we mentioned the company, I noted that Airwallex is entering its Series E extension against two acquisition offers from fast-growing fintechs. I wonder if the investors (or Airwallex itself) ask themselves whether choosing to live independently is the right choice.

Meanwhile, the company continues to develop its own platform on its own steam. Airwallex’s core focus is currently on two areas. Corporate banking includes bank accounts, money transfers, payment cards, expense management, and B2B payment linkage. And its platform product is a set of embeddable financial services that customers integrate into their own platforms or websites using APIs to provide experiences for themselves and their customers. surname. These include online payments, treasury services for storing and managing international funds, foreign exchange for international pricing, payments and card issuance.

Airwallex, as we wrote before, made headlines when it was first founded by doing the right thing at the right time: it did the hard work of integrating with multiple banks and building complex financial services and then make them easy to use (based on APIs) so that companies doing business across national borders can set up banking and money transfer services quickly, initially First outside of Asia Pacific and finally globally.

“Over the past six years, we have built more than 50 banking integrations and now offer payments in 95 countries, paying through a partner network,” Zhang told me in 2021. From there, it moved on. to bank accounts and “different from the primitives” with card issuance and more, he said, eventually building an end-to-end payment system.

That business has seen a huge increase in demand (and valuation) amid the Covid-19 pandemic, when – in the absence of in-person operations and people taking on more facets of work and their leisure lives online – businesses have digital saw transactions happening through the roof; and those more focused on the offline world before the pandemic realize they need a clear digital twist.

The big question lately – for both Airwallex and many others like Stripe, PayPal, Revolut and many others – is whether those changes will persist as the world slowly reverts back to routines and processes. before the pandemic or not. Airwallex’s growth seems to suggest more opportunities ahead, although not at the level expected a year ago.

The most dynamic markets right now are China, the UK and North America, said Zhang, and the plan is to continue to expand in specific countries with particularly strong addressable markets. Israel is one such country, as almost every business there with a digital perspective has international operations to expand outside of their small home market – “Every startup Every business has a potential customer!” Zhang added that this is also a hotbed for potential acquisition targets, especially right now, as it becomes much more difficult for smaller companies to raise capital.

For example, one area where Israel is very strong, and Airwallex does not currently have a solution of its own, is in the area of ​​anti-fraud.

“I am very interested in that form of M&A space,” said Zhang.

Separately building their own business and pursuing acquisitions to expand inorganically, the founders of Airwallex are also building another venture to fuel their business growth, a fund invest. Capital 49as its name suggests, has been relaunched in July 2021. Unlike other funds that aim to expand the ecosystem of products like the Alexa Fund at Amazon or the Slack Fund, Capital 49 does not operate off Airwallex’s balance sheet, instead tapping a number of investors. of Airwallex as the LP but uses Airwallex’s knowledge of the market to guide it.

“We have accumulated extensive knowledge in fintech and SaaS and support exciting startups in these categories powered by Airwallex’s infrastructure,” said Zhang. main of the fund”.