Airwallex co-founder Lucy Liu laments Fintech Unicorn’s outlook despite tech sector slowdown
The Melbourne payments startup maintains a $5.5 billion valuation and looks set to add staff even as other companies cut jobs.
Jjust a few A short time ago, Lucy Liu was hanging out in a cafe in Melbourne after quitting her job in China to travel. Today, she is the co-founder and president of Airwallex, among the fastest-growing private companies in the Asia-Pacific region and one that is proving resilient to the downward trends in startup funding and hiring that are ravaging the global technology sector.
In just over a year, the fintech unicorn has raised $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 stable at $5.5 billion.
“In this market, I think investors like to invest in the leaders of the industries,” Liu says 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 are very good at what we do.”
The 31-year-old is one of four co-founders of Airwallex, which started in 2015 and offers a software platform that allows small and medium-sized businesses to pay international invoices and bills without large fees. It has since expanded into other fintech offerings, such as bank accounts, fundraising solutions, virtual credit cards (with Visa), and buy now, pay later services (in partnership with Atome Financial, a unit of Singapore-based AI company Advance Intelligence Group ).
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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 headquarters in Hong Kong and Melbourne and more than 20,000 customers in sectors including e-commerce and software-as-a-service (SaaS) in more than 50 markets worldwide, from Australia and Hong Kong to Singapore, Major UK and US 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 same period last year, without giving a dollar figure.
“We are 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 his career. “I think that global financial infrastructure is something that is quite unique. It takes a lot of time, money, resources and people to build, and it’s not something people can easily copy or catch up with, she says.
IIt took nearly two years to build the foundation for Airwallex’s proprietary cash flow infrastructure, and including the latest funding round, has raised more than $900 million. Most of the proceeds have been used to expand the number of employees, now at more than 1,300 in 19 offices worldwide. It has more than doubled since last year – Airwallex is now one of the fastest growing private companies in terms of number of employees in Asia, outside mainland China and India.
Airwallex’s growth was driven by the Covid-19 pandemic, which accelerated trends towards online shopping and digital entertainment – sectors where many of its customers operate. According to a UN trade report, the share of internet users shopping online increased to 60% in 2020-21 from 53% in 2019. The report also notes that combined online retail sales in China, US, UK, South Korea, Canada, Australia and Singapore – which together make up about half of the world’s gross domestic product – increased by more than a third to $2.9 trillion in 2021 from 2019.
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“We really grew with our customers together in the different verticals they operate in, whether it’s e-commerce, gaming or online education,” says Liu. “These sectors have really accelerated in the last two or three years.” One such customer is SleekFlow, a Hong Kong-based SaaS startup that offers an integrated platform that allows products and services to be sold directly through social media. Henson Tsai, its founder and CEO, says the company uses Airwallex for all of its transactions, noting Airwallex’s low-fee, easy-to-use virtual multicurrency cards. A big 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 which Airwallex and other similar companies aim to disrupt.
Although Liu says Airwallex’s infrastructure is difficult to copy, the company still faces competition from giants 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 provider of payment gateway with $200 million in annual transactions, and payment solutions company Razorpay in India, with around $90 billion (all three companies overlap with some but not all Airwallex activities). Airwallex’s transactions on an annual basis are 50 billion dollars.
A report by 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-driven 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 offer. According to a media report, Stripe made a failed A$1.6 billion bid for its smaller rival in 2018 (Airwallex declined to comment). Airwallex tells Forbes Asia it is considering an IPO as early as 2024.
Mat the same time, Liu, who made Forbes Asia‘s 2020 Power Businesswomen list, 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 cut jobs following a hiring frenzy during Covid-19. That includes Stripe, which announced in early November that 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 the Airwallex is “1,300 [employees] may seem like a lot, with the size of the business we support, 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 mentoring program at Startup Victoria, one of Australia’s largest entrepreneurial communities, as well as at the University of Melbourne’s startup accelerator program. Airwallex also provides scholarships and bursaries to some of the university’s students. “We really want to be able to help the engineering and IT students, especially because we want them to see us as a top choice for their careers,” says Liu.
From left: Xijing Dai, co-founder and CTO; Jack Zhang, co-founder and CEO; Lucy Liu, co-founder and president; Max Li, co-founder and head of design.
Courtesy of Airwallex
Airwallex was started in 2015 by Liu and three friends from the University of Melbourne: Jack Zhang, who worked as a software engineer at the 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 spent 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 believed the cross-border payment 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 Chief Design Officer.
While Zhang, Dai and Li had the technical expertise, Liu had something the others did not: a network of investors cultivated while working as an investment consultant at CICC that she could tap into fundraising. According to an early investor in Airwallex, she also served as “the glue between everyone [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, “Among the big personalities, sometimes within the founding team, she was the one who added right for many discussions.”
Liu’s ability to smooth out 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 venture into entrepreneurship, saying: “There were a lot of ups and downs and career setbacks. So I think that kind of inspired me to be a very resilient person.”
