For Airwallex, raising money on private markets is about staying in the fast lane for growth
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Australian fintech Airwallex has been in a hurry since it raised $4m in early-stage capital back in 2016.
That was followed by another $17m in May 2017, before a blockbuster $108m Series B round caught the market’s attention in July last year.
Then in March, the company tapped late-stage VC fund DST Global for a $140m Series C round, confirming its status as a tech “unicorn” with an implied valuation above $1bn.
Along with DST, the company has taken on investments from a who’s who of international players, including Hong Kong-listed Tencent Holdings and the Asian arm of Sequoia Capital.
So with a pedigree like that, Airwallex — which began as a cross-border payments platform and is now branching out into financial services — has got some unique insight into what it takes to raise big capital rounds on private markets.
Stockhead caught up with the company cofounder and president Lucy Liu to discuss the company’s experiences raising capital.
Stockhead: How did the latest capital raise with DST Global come about?
Liu: For this round, the DST venture partner we worked with is based in London, and he’d previously led a few round in other fintech companies across Europe and North America, so it was quite easy in the sense that we’re based in the same industry.
The reason he invested in us is firstly, he liked the team and secondly, he saw the potential of the market opportunity.
I think the payments space is very crowded in Europe and North America, but we’re quite unique in terms of our tech offering and we’ve been able to demonstrate traction and growth over the past three years.
Stockhead: How long did the investment process take between meeting DST Global and raising the capital?
Liu: We spent quite a bit of time to get to know each other. The investment was made late last year, but we only announced it in March to coincide with our new product launch. I’d say the end-to-end process took around six months, which is quite normal.
Stockhead: How closely does Airwallex work with its investors to try and leverage off the benefits of their strategic expertise?
Liu: I think it depends on the relationship people have with investors and how much help you need. With our investors, we specify the areas we want advice in, maybe ask for an intro to certain companies within their portfolio, or advice in the corporate structure.
They provide feedback and help based on our needs. I do know investors who might be more active, but it depends what style the investor and company are both comfortable with.
These are the things you tend to find out pre-investment; how people work together. That will affect who you go with as your investor.
Stockhead: For a company with strong early revenue growth, the opportunity to list publicly has probably been available. What factors are behind Airwallex’s decision to remain private?
Liu: For us we’re really looking for a global footprint, so you have to grow very quickly. And one thing about being private is there’s definitely less regulations, so our competitive advantage is to keep things fast moving. We still spend some time on regulation and compliance because of the nature of our business, but from a team perspective we’re quite product and tech driven.
In addition, we still prefer to have our data private so we don’t want to disclose it too much. And I think from a valuation perspective we really need professional investors to understand what we’re doing, as opposed to being listed where the public will have to value the business, which is very difficult at our stage because it’s too technical.
Stockhead: Having taken on board big capital rounds from global investors, what is your view of how private markets are developing in Australia?
Liu: From my experience in Australia, the market is there and it’s growing. So compared to five years ago I definitely see a lot of growth in terms of the number of funds and the money they can invest.
Also, some global VC funds are coming to Australia to invest which is affecting the landscape as well. Previously, on one end I saw local funds generally making very early-stage investment, and on the other end you corporate funds such as bank investment arms.
So the VC stage – there was sort of a gap, but I also think in Australia if you want a public listing, you can go maybe a bit earlier than if you’re in other markets. So companies who are not massive could also get listed the ASX.
Stockhead: Does Airwallex have a game-plan to move from private markets to public markets at some point?
Liu: A public listing isn’t on the roadmap at the moment. We’re taking a very high priority to launch in the Europe region, and broaden our product offering beyond FX to bank account collection and other payment gateways, such as credit cards.
Cross border services need to be global by default, so we’re targeted in terms of where our customers are, but in terms of what they require from us it needs to be a global capability.