Target Information

Airwallex, co-founded by Jack Zhang and Lucy Liu in 2017, aspires to be the financial backbone for global-first companies. Over the past eight years, it has successfully facilitated operations for more than 150,000 businesses, solidifying its position as a premier provider in the realm of international commerce.

Through its innovative solutions, Airwallex continues to redefine the standards for cross-border payments, treasury management, foreign exchange (FX), and card-issuing services. This progress has culminated in a recent funding round, where Airwallex raised US$300 million in its Series F investment round, marking our seventh investment in the company.

Industry Overview

The landscape of cross-border commerce is experiencing exponential growth. Digital-first small and medium enterprises (SMEs) represent the fastest-growing segment, yet their financial needs remain complicated and costly. Despite a burgeoning market, many businesses struggle to efficiently manage their treasury and payment solutions.

According to McKinsey, the cross-border payments sector is anticipated to exceed US$3.1 trillion in revenue by 2028. Currently, Airwallex's gross profits represent just a minor fraction of this total addressable market (TAM), highlighting the significant unresolved challenges within the industry.

Operating within this space involves navigating a fragmented framework where local bank partnerships and necessary licenses are slow to obtain and often capital-intensive. Few companies can effectively operate across more than 50 regions, and even fewer offer integrations with contemporary developer tools that simplify the user experience.

Airwallex has established a robust regulatory presence with over 60 licenses and an API-first platform, allowing clients to deploy wallets, cards, and payout capabilities with remarkable speed and efficiency, moving from concept to execution in mere hours rather than months.

The Rationale Behind the Deal

The decision to invest in Airwallex is driven by the immense opportunity present in the cross-border transaction sector. With a proven ability to innovate as they grow, Airwallex can continually refine its services, attracting a wider customer base. This dynamic creates a defensible business model, where the company’s value proposition enhances with scale.

As they navigate an evolving market, the combination of regulatory depth, product sophistication, and strategic distribution positions Airwallex favorably among its competitors. The investment aims to bolster Airwallex's growth trajectory and market presence further.

Information About the Investor

Square Peg, a notable venture capital firm, has a history of identifying and nurturing high-potential enterprises. With a focus on technological advancements and innovative business models, Square Peg prides itself on building lasting partnerships with teams that exhibit an ambitious vision and a commitment to scaling effectively.

Throughout its eight-year alliance with Airwallex, Square Peg has recognized the founders' strong leadership and unwavering dedication to developing a transformative approach to global finance. This ongoing partnership reflects Square Peg’s core investment philosophy, emphasizing long-term relationships with dynamic founders.

View of Dealert

In assessing the investment in Airwallex, it is clear that this company stands out in the fintech landscape due to its unique market advantages and ambitious roadmap. The leadership team's commitment to maintaining a product-first culture while expanding their global footprint indicates a strategic foresight that is often crucial for long-term success.

The combination of extensive regulatory licenses, innovative product offerings, and a clear understanding of market dynamics positions Airwallex to capitalize on the trends within the cross-border commerce sector effectively. As SMEs increasingly seek efficient solutions for their international operations, Airwallex is well-poised to capture a significant share of this growing market.

Moreover, the qualities that Square Peg values in Airwallex—a talented workforce, a commitment to innovation, and a strategic vision—suggest that this investment could yield substantial returns over time. The foundation laid by the leadership team within the last eight years sets a promising stage for Airwallex's future trajectory.

Overall, the investment in Airwallex is likely to be a sound decision, considering both the evolving needs of the cross-border payment landscape and the company's demonstrated capability to scale and adapt successfully.

View Original Article