Once close enough for an acquisition, Stripe and Airwallex are now going after each other

Jack Zhang, co-founder of Airwallex, found himself at a pivotal crossroads three and a half years into running his startup when he met with Silicon Valley heavyweight Michael Moritz from Sequoia Capital. Moritz proposed an acquisition offer from Stripe, valuing Airwallex at a staggering $1.2 billion, despite the company only generating around $2 million in annual revenue at the time. The allure of such an offer was undeniable, suggesting a revenue multiple of nearly 600 times. Zhang, reflecting on this crucial moment, spent two weeks in San Francisco wrestling with the potential sale. He ultimately decided against it, inspired by a vision to develop a financial infrastructure that enables businesses to operate globally as if they were local entities. This decision has proven to be remarkably astute, as Airwallex now boasts over $1.3 billion in annualized revenue with an impressive year-over-year growth rate of 85%. The journey to this point has not been easy. Zhang's upbringing in Qingdao, China, and his subsequent move to Melbourne at age 15, marked the beginning of a challenging path. His family's financial struggles compelled him to work multiple jobs to support himself while studying computer science at the University of Melbourne. From bartending to working night shifts at a petrol station, Zhang's resilience was honed early on. Before founding Airwallex, he embarked on a series of entrepreneurial ventures, including a magazine and a real estate development company. The concept for Airwallex emerged when he faced difficulties processing payments for coffee bean suppliers across various countries, leading him to explore how the existing banking systems operated. Fast forward to today, Airwallex has acquired nearly 90 financial licenses across 50 markets, a feat that took years of meticulous work, particularly in Japan where the licensing process spanned seven years. This extensive regulatory groundwork allows Airwallex to hold funds within its ecosystem, providing advantages over competitors like Stripe, which must transfer funds immediately to merchants. As both companies increasingly overlap in international markets, the competitive landscape is shifting. Traditionally, Airwallex focused on CFOs in Australia and Southeast Asia, while Stripe catered primarily to U.S. developers. However, with Stripe's expansion and Airwallex's entry into the U.S. market, the rivalry is intensifying. Zhang acknowledges the challenges ahead, particularly in terms of brand recognition. Stripe's status as a Silicon Valley darling poses a significant hurdle, as Airwallex strives to establish itself within the developer community, not just among finance teams. Investors are closely monitoring this competition, with both companies backed by notable firms like Sequoia and Greenoaks Capital. While Stripe was recently valued at $159 billion, Airwallex holds a valuation of $8 billion, a stark contrast that Zhang believes does not reflect their relative payment volumes. With ambitious goals set for the future, including a target of one million customers by 2030 and the rollout of AI-powered finance products, Zhang is committed to closing the revenue gap with Stripe. The competitive dynamic presents a complex narrative, one that will evolve as both companies strive for leadership in the global payments arena.