Melbourne fintech startup Airwallex has completed a $US13 million ($17.4 million) Series A funding round less than 12 months after it raised $4.5 million pre-launch.
The latest investment round, led by Tencent Holdings, Sequoia Capital China and MasterCard, will be used to accelerate Airwallex’s global expansion and help it launch a suite of new product features for customers on its international payments platform.
Airwallex allows SMEs to access interbank mid-market exchange rates when making cross-border transactions. It’s platform uses algorithms, big data analytics and quantitative models to work around market volatility.
Co-founder and chief executive Jack Zhang says bringing on strategic investors like MasterCard is a “big achievement”.
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“The business is on the right track and we have acquired some of the biggest clients around the world,” Zhang tells StartupSmart.
“We also have more than one thousand businesses signed up to our online platform.”
Airwallex is headquartered in Melbourne with offices in China and London. In July 2016, it secured $4.5 million from Chinese venture capital firm Gobi Partners, Gravity VC and prominent angel investors.
Based on current projections, Zhang says Airwallex is “on track to transact billions by the end of the year”.
But without external investment and support from strategic partners, he doesn’t feel Airwallex could achieve this feat.
“It’s just how fast we grow,” he says.
Over the past year, Zhang says Airwallex’s global team, which includes co-founder Liu Yueting who recently featured in Forbes 30 Under 30 Asia, has grown from four to 40. In March, the startup opened its London office.
In addition to fuelling its market expansion, Zhang says the funding will enable Airwallex to do “significant” research and development and look at setting up operations in Singapore.
“We just need more cash to further expand the business to the next level,” he says.
Raising investment versus bootstrapping
Zhang believes globally ambitious fintech startups today would find it impossible to succeed without external investment from strategic investors.
“I never understand the idea of bootstrapping basically,” he says.
While the likes of Atlassian and Envato have achieved great success through bootstrapping, Zhang says fintech startups face a range of complex requirements, from licensing and compliance through to legal restrictions, which are amplified when playing across multiple global markets.
“[Bootstrapping’s] almost impossible in the fintech industry because there’s too much barriers … the tech stack is more than a simple app,” he says.
“[When you’re building] an end-to-end enterprise and architectural infrastructure, it requires the best tech [talent] in the industry to help you build it.”
How to hit the ground running as a global startup
Zhang says Airwallex has been a global venture from day one and every decision in the startup has been made with this in mind.
“The nature of our business is cross-border so we had no choice but to look at different markets around the world,” he says.
Zhang says he invests significant time into recruiting the right people and partners to help the startup reach its “ambitious” goals.
“I spend more than 30 percent of my time to onboard the right people to help me expand the business … we were very ambitious and we went for the biggest strategic partners in the world,” he says.
“We have loads of investors who want to invest in us but we basically take the best.”
Approaching cream of the crop investors
These kind of strategic investors, Zhang says, “look at the founder’s profile and personality and how the company’s growing so far”.
“The most important thing they will look at is the market you play in and the actual technology you have”, he says.
“And why other people can’t do the same thing.”
Founders will also need to demonstrate strong vision by outlining plans to protect growth over the next five years, for example.
“Be honest and truthful about your strengths and challenges and I think just be ambitious about [what] this company is going to become,” he says.
“For us to find a strategic partner like Tencent and MasterCard, it’s about what value you can provide them strategically in the next decade.
“And why you’re better than anyone else in the market.”