Hong Kong-based fintech unicorn Airwallex has garnered $160 million in a Series D round of financing as it seeks to expand its footprint in Europe, the United States, and other new markets.
Airwallex is valued at $1.8 billion after the funding round, it disclosed.
The Series D round attracted participation from a group of new strategic investors including ANZi Ventures, the corporate venture capital arm of Australia’s ANZ Bank, and Salesforce Ventures, the investment unit of American cloud-based software developer Salesforce.
Existing investors Sequoia Capital China, Chinese gaming and social media giant Tencent, and Asia-focused private equity major Hillhouse Capital also participated in the new round. DST Global, an early investor in firms such as Facebook, Twitter and Spotify, and Horizons Ventures, which manages Hong Kong tycoon Li Ka-shing’s venture investments, also joined the financing.
The Series D round took the total capital raised by Airwallex to over $360 million. The investment comes slightly over one year after Airwallex completed a $100 million Series C round and crossed the $1 billion valuation mark in March 2019.
“We kicked off the fundraising [of the Series D round] before the Chinese New Year, so it was not affected by the COVID-19,” said Lucy Liu Yueting, co-founder and president of Airwallex, in a phone interview with DealStreetAsia.
She said the company spent a couple of months on the fundraising, and most investment agreements were finished before the Lunar New Year.
“We also have the participation of existing investors, whose decisions were much quicker than new investors because they know more about the business,” she added.
Airwallex was founded in Melbourne in 2015 by Chinese entrepreneur Jack Zhang, the current chief executive officer, along with co-founders Lucy Liu, Jacob Dai and Max Li. The company, which moved its headquarters to Hong Kong in 2018, primarily helps businesses collect and settle payments when their users spend money around the world.
The company has seen stable year-on-year revenue growth in the first quarter of 2020, thanks to “a diversified portfolio of clients” from industries ranging from logistics and online travel service, which are much affected by the pandemic, to online education and e-commerce that have enjoyed growing opportunities during the period.
“I think the first quarter is naturally an off-peak season compared to the fourth quarter [in 2019] when there were many e-commerce activities like Black Friday and Double 11, whereas the first quarter has the Chinese New Year and a shorter February,” said Liu. “But there was stable growth in the quarter compared to [the same period] in 2019.”
The company is developing in a burgeoning cross-border payments market that is valued at nearly $21 trillion with a 90 per cent compound annual growth rate (CAGR), fuelled by an increasingly connected global economy and a shifting consumption habit from offline to online, according to CB Insights.
Since its entry into the unicorn club, Airwallex has been seeking to evolve from a cross-border payment solutions provider into a fully integrated end-to-end financial services unicorn for businesses of all sizes.
To this end, it has been working on new product capabilities including new payment acceptance service through a proprietary gateway solution and partner integration, as well as the recent launch of Airwallex Borderless Cards in partnership with payments technology firm Visa.
The new card offering, which enables Airwallex account holders to pay suppliers in seconds, was debuted in Australia in February 2020 and will soon be available in markets including Hong Kong and the UK later this year.
“We haven’t seen any new startups in the [cross-border payment] space last year because the entry barrier is rising every day, including [difficulties in] license applications and banks becoming more restrictive on whom they work with, and other challenges that companies must face in the field,” said Liu.
“Like us, other payment companies are growing and expanding offerings to cover the payment lifecycle. Consumer-oriented companies, for example, started to service corporate clients as well,” she said. “I think the market is becoming more consolidated and competitive in the sense that many companies are trying to offer more.”
Airwallex now has over 420 employees across 10 international offices in Melbourne, Hong Kong, Shanghai, Shenzhen, Beijing, Singapore, London, San Francisco, Tokyo, and Bangalore. It plans to aggressively expand its global footprint in 2020 through customer acquisition and licensing with a focus on Europe, the United States, and new markets such as the Middle East.
Earlier this month, the company obtained a Money Transmitter License (MTL) from the Missouri Division of Finance in the United States, which is one of two licences required to roll out payment services in the country.
Liu said that Airwallex is looking at acquisition opportunities in the payment industry that can help the firm shorten the duration needed to foray into a new market and “fast track” new product offerings by six to 12 months, if not years.