“But there are a number of reasons why we raised, and an important one is for acquisitions – assets are getting cheap, particularly software.”
Mr Zhang said the business was bulking up an internal acquisitions team, including recruiting the former head of tech, media and telco from Morgan Stanley in Singapore.
“[Valuations are down] anywhere from 50 per cent to 80 per cent on last year,” he said.
“[We’re looking at] things that will work with Airwallex’s proposition – to be the global financial infrastructure to power modern businesses.”
Jack Zhang’s Airwallex has raised another $US100 million. Paul Jeffers
The fintech, which was the fastest company in Australian history to achieve the so-called unicorn status when it hit this milestone in 2019 less than four years after it was founded, was created by Jack Zhang and three University of Melbourne friends – Lucy Liu, Jacob Dai and Ki-Lok Wong – and Max Li, his former partner in Docklands coffee shop Tukk & Co.
The inspiration for the business came when Mr Zhang was frustrated by the cost of importing coffee cups and labels for their cafe from Hong Kong and China.
While Airwallex started out providing businesses with a cheaper, faster way to make cross-border payments, its services have since expanded to include bank accounts, borderless cards (provided in partnership with Visa), online payments acceptance and a suite of application programming interfaces.
It also provides payment services for domestic transactions, as well as international ones.
The latest capital injection takes Airwallex’s total funding to date to more than $US900 million.
Existing investors Square Peg Capital, Salesforce Ventures, Sequoia Capital China, Lone Pine Capital, Hermitage Capital, 1835i Ventures, and Tencent invested again, as did superannuation fund Hostplus and a North American pension fund.
“The valuation underscores investors confidence in Airwallex’s core business value and fundamentals, and we are fortunate to have the continued support of our existing investors, and the confidence of new investors, as we pursue our vision to become the global economic infrastructure for modern businesses,” Mr Zhang said.
Airwallex’s local customers include Qantas, Stake, OrbitKey, and Mr Yum.
The business is burning $US6 million to $US7 million a month in cash, but it is modifying its expansion plans to enable it to hit cashflow positivity next year.
Mr Zhang said the company’s revenue run rate was close to $200 million now, and it was already profitable in its core markets, so hitting cashflow positivity was just a matter of adjusting how fast it expands into new geographies.
“We’re planning to invest a lot more into the Middle East and South America, but we’ll pull back on that a little bit and focus on building the infrastructure, rather than hiring a 300-person team,” he said.
“Growth in new markets will be slightly slower than the aggressive goals we had, but that is healthy for us in a way. We used to hire 100 people a month, and with that mentality, it meant not everyone we hired was up to standard.”
Mr Zhang pulled forward his timeline for Airwallex to hit cashflow positivity because of the shift in the tech market conditions, but said the business had not made any redundancies and did not plan to.
While the business has slowed its hiring, it still has 150 roles open it hopes to fill before the end of the year.
In 2023, Mr Zhang wants to cement Airwallex’s position as a payments tech leader in the Asia Pacific, continue expanding in the US and Europe, and also launch in Japan and India.
Reflecting on what the tech correction has been like to navigate for founders, Mr Zhang said the next few years would be “brutal” for a lot of start-ups.
“I think more than 90 per cent of businesses will not be able to raise, or do so… at similar conditions set in the previous round,” he said.
“Especially for late stage start-ups, you’ll see a lot of convertible notes, structured deals, debt equity and that type of stuff.
“We have had multiple people tell us they’re interested in the company, but they want to put a structure around [investing], but we tell them no because that puts us in a time box to IPO. It puts pressure on us and the employee equity value because then preference shares have a lot more advantages and favourable terms compared to employee shares. We don’t want to do that.”
