It is significantly larger than the next-biggest of 2018 so far, which is the $60 million round banked by SafetyCulture in May.

Building the network

Much of the new money will be used to keep building Airwallex's payments network, which includes an application programming interface for banks and businesses to connect to its ecosystem, and an algorithm which claims to route payments from sender to receiver in the cheapest and fastest way possible.

Airwallex claims its system automates foreign exchange conversion, has transparent pricing to avoid inflated margins, and is able to support thousands of transactions per second.

While only Tencent and Sequoia have board representation outside the founders, co-founder and chief executive Jack Zhang said he considered Square Peg a significant strategic investor as well as a financial one because of its founder Paul Bassat's experience starting SEEK.

Airwallex co-founders Ki-Lok Wong (principal architect) and Lucy Liu (chief operating officer). Arsineh Houspian

The start-up can look to tap that expertise as its network targets businesses that need to process large volumes of low-value cross-border payments, such as online marketplaces.

Banking technology


Airwallex co-founder and chief operating officer Lucy Liu told The Australian Financial Review that some banks had technology that constrained their ability to deal with new payments possibilities, and that it therefore needed to have funds to build its own solutions in some cases.

"The user interface and user experience will only get us far, so with this round we'll be looking for more licences in key banking areas, either via acquisition or applying for our own," Ms Liu said.

"The regulatory deposits required for this are one of the reasons we've raised so much."

For instance, Ms Liu said Airwallex would consider a virtual banking licence in Hong Kong, with "financial inclusion" of small-to-medium enterprises throughout the region an aim.

"So many SMEs, including in Australia, are trying to grow internationally but are hit by barriers around payments and foreign exchange," she said.

Overly complex system

Mr Bassat said the international payments market featured "overly complex incumbent providers and huge, concentrated profit pools" and was ripe for disruption by a network that bypassed traditional payments rails.

However future investors might be more skeptical of Airwallex's participation in the low-cost, low-value payments space, according to Grant Halverson of payments consultancy McLean Roche.


"Below $10,000 a transaction there's not a lot of regulatory supervision and it's expensive to supervise legitimacy yourself," he said.

"You've only got to look at how Commonwealth Bank got into trouble with its intelligent deposit machines for why the market may see Airwallex's strategy as risky."

Airwallex said it had market-leading compliance systems, and experienced compliance teams in every market in which it operated.

Financial performance

Regardless Airwallex will shortly hire 10 to 20 more software engineers in its Melbourne headquarters, Ms Liu said, although most of the growth from its current headcount of 115 would support its offices in China, Hong Kong and London.

Amazingly in light of how much money it has raised, Airwallex Pty Ltd made only $14,803 in service revenue in 2016-17, according to its latest financial report. Mr Zhang has previously explained its platform did not launch until May 2017 and that it did not sign up its first major institutional client until July. He was targeting $20 million revenue in calendar 2018.

The Australian business did receive $2.1 million of 'other income' in 2016-17, which Ms Liu said was a payment from Airwallex's Hong Kong subsidiary for the software and intellectual property developed in Melbourne. The parent company is based in the Cayman Islands.

Airwallex Pty Ltd lost $500,000 between its incorporation on 3 December 2015 and 30 June 2016, most of that from an impairment of $7.5 million on sweat equity shares the founders were issued for creating the company's intellectual property, which was later adjusted with the Australian Securities & Investments Commission.

Airwallex's $108 million Series B narrowly consigns Aconex to third place in the all-time Australian start-up fundraising stakes, as the construction software group only got $107.5 million from US firm Francisco Partners in 2008.

Atlassian was the subject of a $US150 million investment led by T. Rowe Price in 2014. However, rather than being a typical funding round, it involved the purchase of secondary shares from company employees and Accel Partners. Accel had led an earlier $US60 million investment, which was also used to buy out existing investors, rather than fund the company itself.