Airwallex Secures $300 Million in Series F Funding, Valuation Hits $6.2 Billion
In a significant boost to its expansion plans, Airwallex, a leading global fintech company renowned for its cross-border payments platform, has successfully raised $300 million in a Series F funding round. This latest influx of capital elevates the company’s post-money valuation to an impressive $6.2 billion, showcasing its resilience and adaptability in a more cautious capital environment.
Major Investors Join the Journey
The funding round attracted prominent investors, including Square Peg, DST Global, Blackbird, Airtree, Salesforce Ventures, and Visa Ventures, along with several Australian pension funds. Notably, 50% of the newly secured capital originated from secondary share sales, underlining the confidence existing investors have in Airwallex’s future trajectory.
Previous Valuation and Growth Trajectory
Previously, the company’s valuation stood at $5.6 billion in 2022, following a boost from investments totaling $100 million from notable backers like Square Peg, HongShan, and Lone Pine Capital. Economic landscapes may have changed since then, but Airwallex has adapted to maintain its growth momentum.
A Deliberate Valuation Strategy
Wu Kai, the chief revenue officer at Airwallex, addressed the nuanced valuation strategy in an interview with 36Kr. He emphasized that this valuation is a "deliberate choice," reflecting the more grounded nature of today’s fintech market.
“Maintaining this valuation is an intentional choice,” Wu asserted, highlighting a significant shift in investor focus compared to 2021’s exuberance.
Shift in Investor Priorities
Today’s investors demonstrate a keen emphasis on product defensibility, sustainable business models, and scalability. As Wu stated, "Proving the sustainability of market growth is now a prerequisite for investor buy-in." This renewed focus means Airwallex is well-positioned for sustained growth, with expectations of maintaining an average growth rate exceeding 50% over the next five years.
Robust Financial Performance
Airwallex’s current financial statistics convey confidence in these growth projections. By March of this year, the company reported an annualized revenue exceeding $720 million, reflecting a 90% increase year-over-year. Furthermore, its global transaction volume skyrocketed to $130 billion, compared to just $50 billion in 2022.
Regulatory Approvals and Diverse Customer Base
With licenses across more than 60 jurisdictions, Airwallex caters to 150,000 businesses in over 150 countries, making it one of the most licensed fintech entities worldwide. An astonishing 95% of transactions are completed within hours, and 68% are processed instantly, with its customer base nearly doubling every year.
Evolution of the Business Model
Since its inception in 2015, Airwallex has transitioned from primarily serving Chinese cross-border sellers to establishing a comprehensive international financial network. Wu pointed out that this shift allows the company to explore new international growth channels.
Future IPO Speculation
When prompted about potential IPO plans, Wu offered a pragmatic view, stating, “This may not be our last round before an IPO.” Airwallex aims for 2026 as a target year to be IPO-ready in terms of internal growth and governance but clarified there is "no fixed date" for the actual IPO.
Two Major Shifts Influencing Valuation
1. Customer Base Diversification
One of the critical shifts affecting Airwallex’s valuation is the diversification of its customer base. Initially serving Greater China, the company has made significant strides in attracting "global local" firms looking to enter international markets. Today, non-Chinese markets contribute 30% to its revenue, with the Asia-Pacific region, accounting for 70%.
2. Expansion of Product Offerings
In addition to expanding its customer base, Airwallex has broadened its product offerings. Since launching its core infrastructure for money movement in 2017, it added card-issuing capabilities with the “Spend” product, allowing clients to manage all global corporate expenses in a singular platform.
Strategic Partnerships Enhance Revenue
The collaboration with Visa has proven lucrative, with the jointly branded Airwallex Visa card now representing nearly 30% of the company’s revenue, highlighting the strength of strategic partnerships in driving growth.
Redefining Financial Infrastructure
Airwallex positions itself not just as a payment platform, but as a financial infrastructure provider, aiming to modularize financial services like foreign exchange and account issuance. This enables businesses to plug in various services seamlessly, akin to building blocks, allowing for enhanced operational efficiency.
Responding to Market Needs
With a distinct focus on the Asia-Pacific region, Airwallex possesses a competitive advantage in local responsiveness—something many Western fintech firms struggle to achieve. Its adept understanding of the complexities in markets like China enables it to support businesses globally, especially during tariff shifts.
Conversational Agility in Finance
Wu envisions that future global finance teams should operate with the same agility as engineering teams. With cross-border payments projected to reach $150 trillion, Airwallex aims to innovate and redefine how money operates globally, aspiring to serve as the financial operating system for international businesses.
The Role of AI in Banking Transformation
In its quest for disruption, Airwallex does not view other fintechs as direct competitors. Instead, it is setting its sights on traditional banks, aiming to leverage artificial intelligence (AI) as a pivotal tool. Wu notes that Airwallex enjoys two significant advantages in AI implementation: superior data integration and faster internal decision-making processes.
Enhancing Operational Efficiency with AI
Airwallex utilizes large language models (LLMs) during client onboarding to tailor services efficiently. The implementation of generative AI in its know-your-customer (KYC) processes has reportedly halved false-positive rates and boosted account openings by 20%, promoting a more streamlined operational framework.
AI Integration Offers Vast Potential
With established systems for onboarding and finance management, Airwallex is strategically positioned to fold in AI agents. This will enhance several financial operations, such as expense management and reconciliation, promising greater efficiency and accuracy.
Precision in Automated Processes
In the evolving landscape of finance, accuracy remains paramount. To ensure precision in automating financial processes, Airwallex employs feedback loops between humans and machines to identify crucial use cases and make necessary adjustments.
The Future Vision: AI Agentic Finance
Ultimately, Airwallex’s ambitious goal is to pioneer a framework called “AI agentic finance,” where AI not only supports, but in many cases, could replace traditional roles like CFOs. This vision includes equipping AI agents to manage vendor relationships, approve expenditures, and handle invoice payments, thereby revolutionizing traditional accounts payable functions.
Conclusion
As Airwallex continues to navigate the rapidly changing landscape of fintech, its successful Series F funding round and strategic innovations position it as a robust player in the global market. By emphasizing product defensibility, regulatory compliance, and AI advancements, the company is uniquely situated to harness the growing demand for cross-border financial solutions. With its forward-thinking strategies and aspirations for future growth, Airwallex is undoubtedly a fintech firm to watch in the coming years.
