Melbourne-born payments startup maintains valuation at $5.5 billion and looks to add staff even as other companies slash jobs.
Just a few short years ago, Lucy Liu was hanging out in a cafe in Melbourne after quitting her job in China to go traveling. Today, she is cofounder and president of Airwallex, among the fastest-growing private companies in the Asia-Pacific region and one that is proving resistant to the downtrends in startup financing and hiring that are rattling the global tech sector.
In the space of just over a year, the fintech unicorn has raised a combined $400 million from an A-list of investors, including DST Global, Sequoia Capital China and Tencent. The series E funding round, which closed in October, kept the company’s valuation steady at $5.5 billion.
“In this market, I think investors like to invest in the leaders of the industries,” says Liu in a video interview. She adds: “I think we have that track record and have proven that our business model works. We know what the market needs and we’re really good at what we’re doing.”
The 31-year-old is one of four cofounders of Airwallex, which started in 2015 providing a software platform that allows small and medium-sized businesses to pay international invoices and bills without hefty fees. It has since expanded into other fintech offerings, such as bank accounts, corporate credit cards (with Visa), expense management and online payments, including a buy now, pay later payment option (in partnership with Atome Financial, a unit of Singapore-based AI company Advance Intelligence Group).
The company makes its money by charging a small fee on transactions, the size of which depends on the market and regulations. It has its main offices in Hong Kong and Melbourne and more than 40,000 customers in sectors that include e-commerce and technology companies in more than 50 markets worldwide, from Australia and Hong Kong to Singapore, the U.K. and the U.S. Major clients include Chinese online shopping giant JD.com, Australian airline Qantas, and Tencent’s online-music arm, Tencent Music Entertainment. The company says revenue rose 184% in the second quarter of 2022 from the year-earlier period, without giving a dollar number.
“We’re very focused on building the infrastructure to empower other businesses,” says Liu, who worked at China International Capital Corp. (CICC), one of China’s top investment banks, earlier in her career. “I think that global financial infrastructure is something that’s quite unique. It takes a lot of time, money, resources and people to build, and it’s not something that people can easily copy or catch up to,” she says.
It took nearly two years to construct the foundation of Airwallex’s proprietary money-moving infrastructure, and, including the latest funding round, it has raised more than $900 million in total. A substantial amount of the proceeds have been used to expand headcount, now at more than 1,300 across 19 offices worldwide. That 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 was fueled by the Covid-19 pandemic, which accelerated trends toward online shopping and digital entertainment—sectors in which many of its customers operate. According to a U.N. trade report, the percentage of internet users who shop online increased to 60% in 2020-21 from 53% in 2019. The report also notes that the combined online retail sales of China, the U.S., the U.K., South Korea, Canada, Australia and Singapore—which together account for about half of the world’s gross domestic product—expanded more than a third to $2.9 trillion in 2021 from 2019.
“We really grew with our customers together in the different verticals that they operate in, whether it’s e-commerce, gaming or online education,” says Liu. “These sectors have really accelerated in the past two or three years.” One such customer is SleekFlow, a Hong Kong-based SaaS startup that provides an integrated platform allowing products and services to be sold directly through social media. Henson Tsai, its founder and CEO, says the company uses Airwallex for all its transactions, noting Airwallex’s low-fee, easy-to-use virtual multicurrency cards. One major upside 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 that Airwallex, and other companies like it, aim to disrupt.
While Liu says Airwallex’s infrastructure is difficult to copy, the company nevertheless faces competition from behemoths such as global payments processor Stripe, which had more than $640 billion in transactions in 2021, and scrappier outfits in the Asia-Pacific region such as Indonesia’s Xendit, a payments gateway provider with $200 million in annualized transactions, and payments-solution company Razorpay in India, with about $90 billion (all three companies overlap with some but not all Airwallex activities). Airwallex’s annualized transactions stand at $50 billion.
A report from Deloitte Financial Advisory says the global market for digital payment transactions will grow at a CAGR of 13% between 2020 and 2026, to $11.3 trillion, down from a pandemic-fueled 28% in 2020. It expects consolidation in the industry as competition increases and companies scale up. Airwallex has already been the target of a takeover bid. According to a media report, Stripe made an unsuccessful A$1.6 billion offer for its smaller rival in 2018 (Airwallex declined to comment). Airwallex tells Forbes Asia it is considering an IPO as early as 2024.
Meanwhile, Liu, who made Forbes Asia’s Power Businesswomen list in 2020, is looking for the next generation of leaders to join the company, despite the general trend in the tech industry that has seen many companies slash jobs after a hiring frenzy during Covid-19. That includes Stripe, which announced early November it would cut 14% of its more than 8,000 workers, citing inflation, higher interest rates, and less funding for startups. Liu says that while Airwallex’s “1,300 [employees] may seem like a lot, with the size of the business that we’re supporting, we’re actually still quite a lean team.”
Liu declines to give a headcount target for the company but says it has 140 positions to fill. To that end, she has been an advisor for a mentor program at Startup Victoria, one of Australia’s largest entrepreneurship communities, as well as at the University of Melbourne’s startup accelerator program. Airwallex also provides scholarships and grants to some of the university’s students. “We really want to be able to help the students in engineering and IT specifically because we want to have them see us as a top choice for their career,” says Liu.
Airwallex was started in 2015 by Liu and three friends from the University of Melbourne: Jack Zhang, who was working as a software engineer at Australia & New Zealand Banking Group; Xijing Dai, a serial entrepreneur with a master’s degree in software engineering; and Max Li, an architect. Liu had taken a career break and was spending time at Tukk & Co., a specialty coffee shop owned as a side business by Zhang and Li (which they have since sold). The two were frustrated in their efforts to pay suppliers in China for coffee cups and labels. They thought the cross-border payments process lacked transparency and exchange-rate and transaction fees were too high. To solve the problem, the four including Liu teamed up to start Airwallex, with Zhang as CEO, Dai as chief technology officer, and Li as head of design.
While Zhang, Dai and Li had the technical expertise, Liu had something the others didn’t: a network of investors cultivated while working as an investment consultant at CICC that she could tap for fundraising. According to one early investor in Airwallex, she also served as “the glue between all of [the cofounders].” Chibo Tang, the Hong Kong-based managing partner of Asian venture capital firm Gobi Partners, says Liu “became the operations person and the culture person.” In addition, he says, “Between the big personalities, sometimes within the founding team, she was the one who was facilitating a lot of discussions.”
Liu’s ability to smooth over differences may reflect her background. She was born in China, the only child of a teacher mother and a serial-entrepreneur father. At the age of 12, she moved to Auckland and later attended the University of Melbourne, where she earned a master’s degree in finance in 2012. She cites her father as an inspiration for her own foray into entrepreneurship, saying: “There were a lot of ups and downs in his career. So I think that sort of inspired me to be a very resilient person.”
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