This article first appeared in Australian Anthill. View the original here.
The jump from seed funding to Series A has propelled Airwallex to the forefront of Australian fintech success stories, with their fundraising of A$17M amongst the largest in Australian history.
As Airwallex’s leading co-founders Jack Zhang and Lucy Liu have learned, it takes more than just a good idea and some numbers to make the history books.
The pair divulged their personal experience of the fundraising process in an interview with Australian Anthill, giving their top tips on what it takes to make the Series A dream become a reality.
1. Streamline your investors
It is no secret that the Series A process involves a huge investment of time as well as money, and investors won’t begin the arduous negotiation process unless they are as passionate about your product as you are. Streamlining who you target is, therefore, a top priority.
Jack and Lucy, who are at the top of their games in FX and VC investment respectively, prioritised the four investors who they believed would complement their interests and understand their vision.
Lucy: ‘Typically investors have an industry or a field that they have a keen interest in – and they’re the ones to shoot for. We knew straight away we wanted Tencent, Sequoia, Mastercard and Gobi Partners as our select four – not only because they’re some of the most established names in payments, but also because of the way they are growing and their passion for innovation.
Once we began talking to them, it became a matter of proving that we knew what we were doing, and showing them we were a worthy long-term investment.’
Jack: ‘VCs want to get to know you, see what you’ve done before and how you’ve progressed before they sign away millions. Who wouldn’t? You’ve got to be prepared for everything you’ve done in the past to be analysed.
You can’t have any loopholes, so you have to be very precise– and you have to be honest too. They will ask you the same questions again and again. We had to prove that we were the experts in our field, and that we were the only people who could solve the problem we wanted to solve.’
2. Numbers aren’t everything
You don’t have to have millions of customers or be rolling in revenue to nail a Series A, say Jack and Lucy. What their investors found more valuable was a clear strategy which proved that what they created from the last round of investment could be replicated on a large scale.
Jack : ‘Series A is not just a bigger version of a Seed Round. You have to show your scalability.’
Lucy: ‘In the Seed round, you usually come across investors who are looking for financial returns whereas in the Series A round, they will be putting more on the line, so developing a thorough strategy from a commercial and legal perspective as well is important.
‘This time around, we really had to go beyond the numbers: we had to show that that we were offering something unique. They looked what we could do with our previous investment, combined with the potential and the skill in the founders and the expertise in our business development, product development, and that made them believe in our vision, and what we could achieve.’
3. Don’t take no for an answer
While it might be tempting to give up after the first closed door, developing a thick skin is essential to succeeding in Series A.
Jack: ‘We spent three or four months with nothing, and then it all happened in two days. So you can’t give up. During these pitches, I literally woke up at 4.30 in the morning to prepare. Even if I’d been rejected, I would keep going back and say ‘Be patient with me, I know I’m annoying’ – but I didn’t stop until they paid attention.
It takes persistence and dedication. Not only that, you really have to leave your mark. I always made sure my message got to the heads in the company, even if it seemed out of reach.’
Lucy: ‘Jack has a very thick skin! One of the surprising things was how fast things moved once they got going, so it consumed all of our energy once the communication began. You’ve got to have stamina! Jack’s energy levels are through the roof.’
4. Take the ‘I’ out of investment
It takes more than one good salesman to get investors hooked. For Jack and Lucy, playing to their individual strengths made their pitch stronger, and a strong team on the ground provided support at a crucial time for the business.
Lucy: ‘During the negotiations, we complemented each other well. Jack used the technical language and explained the technical side of things, so I was the translator, making Jack’s message more accessible from a VC’s perspective. The details of what we said were the same, but the way we expressed and structured our responses helped give the investors a clearer overview and a deeper understanding.
‘We are also forever grateful that we have five co-founders. A lot of companies have two or three and I don’t know how they do it. Since we are all friends, I think there is the trust element too.’
Jack: ‘Yes, we wouldn’t want to disappoint each other.’
Lucy: ‘Not just our co-founders. I mean, we wouldn’t want to let our team down and our employees either. A year ago we only had two or three, and now we have such a big team.’
Jack: ‘We couldn’t have raised the funds without the people. We have some of the best coders in the world, and we’ve got a bunch of employees that work hard to get this pushed across the line. Basically, a dedicated team is what makes it all possible.’
Lucy: ‘I agree, having a team that is passionate about what we’re doing keeps us unified, so we’re all driving consistently towards the same goal. Many of our Chinese team joined us during the fundraising, and even though it was a critical and challenging time, they still chose to join us. That shows their faith in us.’
5. Finally, what does it take to be a Series A superstar?
Lucy: ‘Be ready to think really fast on your feet.’
Jack: ‘Three things: be truthful, be respectful and most of all – super passionate.’