Australian payments start-up Airwallex raises $80m
Melbourne-based payments start-up Airwallex has raised $80 million in a Series B funding round led by Tencent, along with Sequoia Capital China and Square Peg Capital.
It takes Airwallex’s total fundraising to $102 million.
According to the Australian Financial Review (AFR), the company, which was founded by five Chinese-Australian 30-somethings, has built a system to enable cross-border payments by combining payments and foreign exchange (FX) transfers into a single transaction.
AFR points out that Mastercard, whose ‘Send’ personal payments platform is powered in part by Airwallex, is an existing investor. Its stake could be seen as a “beachhead” into the Chinese market, from which it and fellow payments giant Visa are effectively locked out.
Much of the new money will be used to keep building Airwallex’s payments network, which includes an API for banks and businesses to connect to its ecosystem, and an algorithm to route payments from sender to receiver.
Airwallex says its system automates FX conversion, has transparent pricing, and can support thousands of transactions per second.
“The user interface and user experience will only get us far, so with this round we’ll be looking for more licences in key banking areas, either via acquisition or applying for our own,” chief operating officer Lucy Liu told AFR.
“The regulatory deposits required for this are one of the reasons we’ve raised so much.”
The firm says it would consider for a virtual banking licence in Hong Kong, as it seeks (like many others) to tap into the financial inclusion and SME markets.
In terms of staff numbers, Airwallex will soon hire ten to 20 more software engineers in its Melbourne headquarters.
However, Liu explains that most of the growth from its current headcount of 115 would be in customer support roles in its offices in China, Hong Kong and London.
AFR has some done digging around and notes that Airwallex made AU$14,803 ($10,923) in service revenue in 2016-17.
Airwallex’s platform launched in May 2017 and it signed its first major institutional client in July. The start-up is targeting AU$20 million ($14.7 million) revenue in calendar 2018.
Its Australian business did receive AU$2.1 million ($1.5 million) of “other income” in 2016-17, which Liu says was payments from Airwallex’s other subsidiaries for the technology developed in Melbourne. The parent company is based in the Cayman Islands.
Airwallex lost AU$500,000 ($369,000) between its incorporation on 3 December 2015 and 30 June 2016.
AFR states that most of that was an impairment of AU$7.5 million ($5.5 million) on sweat equity shares the founders were issued for creating the company’s intellectual property.