US hedge fund Lone Pine Capital has led a $US200 million Series E funding round for cross-border payments and financial transactions business Airwallex. The raise values the company at $US4 billion ($5.5 billion), up from $US2.6 billion six months ago.  

The funding round was supported by new investors, US firms G Squared and Vetamer Capital Management. Existing investors, 1835i Ventures (formerly ANZi Ventures), DST Global, Salesforce Ventures and Sequoia Capital China also participated in the raising.

Airwallex was launched in Melbourne in 2015 and is now jointly run from Melbourne and China. In addition to Melbourne the company has offices in Hong Kong, Shenzhen, Tokyo, Bangalore, Dubai, Singapore, London and San Francisco.

The company plans to use the new funding to further develop products and technology, continue its geographic expansion and focus on some large business targets. Well-established in Australia and Asia, Airwallex has more recently entered the UK, European and US markets and is expected to concentrate expansion in those areas.   

Like many successful start-ups Airwallex was founded to solve a problem directly experienced by some of its founders. Chief executive and co-founder Jack Zhang, who had previously worked in financial services IT for banks, was working on establishing a coffee importing and distribution business when difficulties in making overseas payments as a small business arose. The process was expensive and slow, with days elapsing before payments were cleared, he discovered.

Soon, Zhang, Xijing Dai, Lucy Lui and Max Li were working on a project to simplify that process. The result was the launch of Airwallex.

From early on, Airwallex adopted a two-part vertical integration strategy for its technology. The team developed a self-contained product that it provides to SME customers for them to make cross-border payments directly. And they built infrastructure for large finance sector organisations to provide cross-border payments services to their customers.

Since then, Airwallex has expanded further into business payments, developing Airwallex Borderless Cards in partnership with Visa and integrating its services with those of cloud-based accounting software provider Xero (ASX: XRO).

The approach of expanding geographically and across markets appears to be working well. Airwallex says its revenues for the first half of the 2021 were 150% up on the same period a year earlier with the company processing total transactions of more than $US20 billion.    

Lone Pine Capital managing director David Craver said: “Airwallex has a clear competitive advantage in the digital payments market. Its unique Asia-Pacific roots, coupled with its innovative infrastructure, products and services, speak volumes about the business’ global growth opportunities and its impressive expansion in the competitive payment providers space.”

Airwallex raised a $US160 million Series D funding round in April 2020 which included ANZ Bank’s venture capital arm ANZi Ventures as a new investor. Salesforce Ventures was also a new investor in that round.

The Series D round was supported by existing investors DST Global, Tencent, Sequoia Capital China, Hillhouse Capital and Horizons Ventures.

In March, a $US100 million top-up to the Series D round was led by US-based global investment firm Greenoaks, and also added Mike Cannon-Brookes’ Grok Ventures and Scott Farquhar’s Skip Capital to Airwallex’s investors.

Zhang said at the time that he wanted to bring on board a US-based investor as the business was about to launch in the US.   

Australian investment firm Square Peg Capital was an early investor in Airwallex.