The Melbourne-born payments startup maintains its valuation at $5.5 billion and is trying to add staff even as other companies cut jobs.
Ja few Not long ago, Lucy Liu was hanging out at a cafe in Melbourne after quitting her job in China to travel. Today, he is the co-founder and chairman of Airwallex, one of the fastest growing private companies in the Asia-Pacific region and proving to be resilient to the downtrends in startup funding and hiring that are shaking up the global tech industry.
The fintech unicorn has raised a total of $400 million in over a year from A-list investors including DST Global, Sequoia Capital China, and Tencent. The Series E funding round, which ended in October, kept the company’s valuation steady at $5.5 billion.
“I think investors in this market love to invest in industry leaders,” Liu says in a video interview. He adds: “I think we have this track record and we’ve proven that our business model works. We know what the market needs and we’re really good at what we do.”
The 31-year-old is one of the four co-founders of Airwallex, which started in 2015 to provide a software platform that allows small and medium-sized businesses to pay international bills and invoices without high fees. It has since expanded into other fintech offerings such as bank accounts, collections solutions, virtual credit cards (via Visa), and buy-now-pay-go services (in partnership with Atome Financial, a unit of Singapore-based AI firm Advance Intelligence Group). ).
The company makes money by charging a small fee from transactions, the size of which depends on the market and regulations. It has main offices in Hong Kong and Melbourne and has more than 20,000 customers in more than 50 markets worldwide, including e-commerce and software as a service (SaaS), from Australia and Hong Kong to Singapore and the United Kingdom. and US Major customers include Chinese online shopping giant JD.com, Australian airline Qantas and Tencent’s online music arm Tencent Music Entertainment. The company says revenue in the second quarter of 2022 increased 184 percent year-on-year, without giving a dollar figure.
“We’re very focused on building the infrastructure to power other businesses,” says Liu, who worked early in his career at China International Capital Corp. (CICC), one of China’s largest investment banks. “I think the global financial infrastructure is something quite unique. “It takes a lot of time, money, resources and people to build, and it’s not something people can easily copy or catch,” he says.
IIt took nearly two years to lay the foundation for Airwallex’s proprietary money handling infrastructure and has raised more than $900 million in total, including the most recent funding round. Most of the proceeds were used to increase the number of employees currently more than 1,300 in 19 offices around the world. This has more than doubled since last year—Airwallex is now one of the fastest growing private companies by headcount in Asia, outside of mainland China and India.
Airwallex’s growth has been fueled by the Covid-19 pandemic, which is accelerating trends towards online shopping and digital entertainment, industries in which most of its customers operate. According to a UN trade report, the percentage of internet users who shop online has increased from 53% in 2019 to 60% in 2020-21. The report also notes that the online retail sales of China, the US, the UK and South Korea are combined. Canada, Australia and Singapore, which together account for nearly half of the world’s gross domestic product, increased by more than a third in 2021 compared to 2019 to $2.9 trillion.
“We’ve really grown with our customers in the different industries they operate in, whether it’s e-commerce, gaming or online education,” says Liu. “These industries have really accelerated in the last two to three years.” One such client is SleekFlow, a Hong Kong-based SaaS startup that provides an integrated platform that allows products and services to be sold directly via social media. Founder and CEO Henson Tsai says Airwallex uses Airwallex for all of its transactions, noting its low-fee, easy-to-use virtual multi-currency cards. A key advantage for Tsai and others like him is that they no longer have to rely on Swift, a global system that has dominated cross-border payments for the past 50 years and which Airwallex and other companies like it aim to disrupt.
While Liu says Airwallex’s infrastructure has been difficult to replicate, the company still faces competition from giants such as global payments processor Stripe, which processed more than $640 billion in transactions in 2021, and Indonesia’s Xendit, scrap yard rigs in the Asia-Pacific region. payment gateway provider with $200 million in annual transactions and payment solution company Razorpay in India with nearly $90 billion (all three companies overlap with some, if not all, of Airwallex activities). Airwallex’s annualized transactions are $50 billion.
A report from Deloitte Financial Advisory says the global market for digital payments transactions will fall from 28% in 2020 due to the pandemic to $11.3 trillion with a 13% CAGR between 2020 and 2026. Consolidation is expected as competition in the industry increases and companies grow. Airwallex has already been the target of a takeover bid. According to a media report, Stripe made an unsuccessful bid of A$1.6 billion for its smaller rival in 2018 (Airwallex declined to comment). Airwallex tells Forbes Asia It plans to go public as early as 2024.
Mby the way, by Liu Forbes AsiaThe 2020 Power Businesswomen roster is looking for a new generation of leaders to join the company, despite the general trend that has seen many companies in the tech industry slash jobs after the frenzied hiring spree during Covid-19. This includes Stripe, which announced in early November that it will lay off 14% of its more than 8,000 employees, citing inflation, higher interest rates and less financing for startups. Liu, Airwallex’s “1,300 [employees] It may seem like a lot, with the scale of the work we support, we’re actually still a pretty lean team.
Liu refuses to set a headcount target for the company, but says there are 140 positions to be filled. To this end, he has been a mentor for a mentoring program at Startup Victoria, one of Australia’s largest entrepreneurship communities, and the University of Melbourne’s entrepreneurship acceleration programme. Airwallex also provides scholarships and grants to some of the university’s students. “We really want to be able to help students in engineering and IT because we want them to see us as the best choice for their careers,” Liu says.
Airwallex was started in 2015 by Liu and three friends from the University of Melbourne: Jack Zhang, a software engineer at the Australia and New Zealand Banking Group; Xijing Dai, a serial entrepreneur with a master’s degree in software engineering; and Max Li, an architect. Liu was on hiatus and was spending time at Tukk & Co., a specialty coffee shop owned by Zhang and Li (which they’ve since sold out) as a subsidiary business. The two were frustrated in their efforts to pay suppliers in China for their coffee cups and labels. They felt that the cross-border payment process was not transparent and the exchange rate and transaction fees were too high. To solve the problem, the quartet, including Liu, came together to launch Airwallex, with Zhang as CEO, Dai chief technology officer, and Li head of design.
While Zhang, Dai, and Li had technical expertise, Liu had something that others did not: an investor network he developed while working as an investment advisor at CICC that he could leverage to raise funds. According to one of Airwallex’s early investors, it is also “all [the cofounders]” Chibo Tang, Hong Kong-based managing partner of Asian venture capital firm Gobi Partners, says Liu has “become a head of operations and a person of culture.” He also says, “He was the one who facilitated a lot of discussions among great personalities, sometimes within the founding team.”
Liu’s ability to smooth out differences may reflect his past. He was born in China, the only child of a teacher mother and a serial entrepreneur father. He moved to Auckland at the age of 12 and later attended the University of Melbourne, where he earned a master’s degree in finance in 2012. He says that he was inspired by his father when he stepped into entrepreneurship and says: “There was a lot. the ups and downs in his career. I think that inspired me to be a very resilient person.