Airwallex raises $13m from Mastercard, Sequoia China, Tencent

With $13 million in funding in its pockets, Melbourne-based fintech startup Airwallex is set for international expansion.

founders.jpg

Airwallex founding team

Image: Timothy Burgess

Australian fintech startup Airwallex has secured $13 million from international investors including Mastercard, Sequoia Capital China, and Tencent.

The Series A round brings the total amount raised by the Melbourne-based startup to $16 million.

CEO Jack Zhang, who co-founded Airwallex with COO Lucy Liu, CTO Jacob Dai, principal architect Ki-Lok Wong, and product architect Max Li, said the startup's order management system uses machine learning to find the best buy-sell trade for any combination of currencies. The system finds the best mid-market point on currency trades so that businesses can avoid inflated margins.

"It takes time, priority, and available routes into consideration as part of the calculation process so as to minimise risk and cost while increasing speed of delivery," Zhang told ZDNet. "This setup allows us to process thousands of transactions per second as cost-effectively as possible, and deliver payments to over 100 countries globally."

Zhang, who previously worked as a foreign exchange solution designer at National Australia Bank, said the idea for Airwallex came after he opened a café with co-founder Li across the road from the bank's Docklands office. While importing custom packaging for their products, the duo found that foreign exchange fees and rates were "really high, much higher than they should be".

Airwallex currently caters to businesses of all sizes in the trade, ecommerce, travel, and financial services space, with its 1,000-plus customers coming predominantly from Australia, China, and across Europe.

The new funding will be used to speed up the release of Airwallex's collection of application programming interfaces intended to allow businesses to process international payments at scale, Zhang said. The startup is also looking to expand into new markets, with plans to open offices in Singapore and the UK already underway.

Airwallex was the first Australian startup to participate in Mastercard's Start Path 'accelerator' program in September 2016 -- through which it was able to access Mastercard's systems and banking partners -- and is the first Australian investment for Sequoia Capital China.

"Foreign exchange transactions pose a real challenge for businesses that operate across borders, and Airwallex's solution has seriously impressed us in its ability to close the gap and allow companies to financially access markets that may have previously been out of reach," Steven Ji, partner at Sequoia Capital China, said in a statement.

The startup had previously raised $3 million in a pre-Series A round led by Gobi Partners, with contribution from Gravity VC, Huashan Capital One, and Billy Tam, CEO of Easylink Payments.

Investments in Australian fintech companies reached its highest level last year, hitting $656 million, more than triple the $185 million invested in 2015, according to a report by professional services firm KPMG.

The growth was driven by large mergers and acquisitions, and venture capital transactions, including CHAMP Private Equity's acquisition of Pepperstone, Stirling Products' acquisition of Mx360 Group, and large funding rounds from Tyro and Prospa.

A survey by Startup Muster also shows that fintech is now the most prevalent industry for Australian startups, with 15.9 percent of the startups and 42.1 percent of the supporters operating in the finance technology space.

The Startup Muster survey found fintech to be among the top areas investors are looking to support, with 56.2 percent of investors eyeing the industry.

While Australia trended upwards, global levels of fintech investment slid by 47 percent to $24.7 billion in 2016.

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