Business, now more than ever before, is going digital, and today a startup that’s building a vertically integrated solution to meet business banking needs is announcing a big round of funding to tap into the opportunity. Airwallex — which provides business banking services directly to businesses themselves as well as via a set of APIs that power other companies’ fintech products — has raised $200 million, a Series E round of funding that values the Australian startup at $4 billion.

Lone Pine Capital is leading the round, with new backers G Squared and Vetamer Capital Management, and previous backers 1835i Ventures (formerly ANZi), DST Global, Salesforce Ventures and Sequoia Capital China also participating.

The funding brings the total raised by Airwallex — which has head offices in Hong Kong and Melbourne, Australia — to $700 million, including a $100 million injection that closed out its Series D just six months ago.

Airwallex will be using the funding both to continue investing in its product and technology as well as to continue its geographical expansion and to focus on some larger business targets. The company has started to make some headway into Europe and the U.K. and that will be one big focus, along with the U.S.

The quick succession of funding and rising valuation underscore Airwallex’s traction to date around what CEO and co-founder Jack Zhang describes as a vertically integrated strategy.

That involves two parts. First, Airwallex has built all the infrastructure for the business banking services that it provides directly to businesses with a focus on small and medium enterprise customers. Second, it has packaged up that infrastructure into a set of APIs that a variety of other companies use to provide financial services directly to their customers without needing to build those services themselves — the so-called “embedded finance” approach.

“We want to own the whole ecosystem,” Zhang said to me. “We want to be like the Apple of business finance.”

That seems to be working out so far for Airwallex. Revenues were up almost 150% for the first half of 2021 compared to a year before, with the company processing more than US$20 billion for a global client portfolio that has quadrupled in size. In addition to tens of thousands of SMEs, it also, via APIs, powers financial services for other companies like GOAT, Papaya Global and Stake.

Airwallex got its start like many of the strongest startups do: It was built to solve a problem that the founders encountered themselves. In the case of Airwallex, Zhang tells me he had actually been working on a previous startup idea. He wanted to build the “Blue Bottle Coffee” of Asia Pacific out of Australia, and it involved buying and importing a lot of different materials, packaging and, of course, coffee from all around the world.

“We found that making payments as a small business was slow and expensive,” he said, since it involved banks in different countries and different banking systems, manual efforts to transfer money between them and many days to clear the payments. “But that was also my background — payments and trading — and so I decided that it was a much more fascinating problem for me to work on and resolve.”

Eventually one of his co-founders in the coffee effort came along, with the four co-founders of Airwallex ultimately including Zhang, along with Xijing Dai, Lucy Liu and Max Li.

It was 2014, and Airwallex got attention from VCs early on in part for being in the right place at the right time. A wave of startups building financial services for SMBs were definitely gaining ground in North America and Europe, filling a long-neglected hole in the technology universe, but there was almost nothing of the sort in the Asia Pacific region, and in those earlier days solutions were highly regionalized.

From there it was a no-brainer that starting with cross-border payments, the first thing Airwallex tackled, would soon grow into a wider suite of banking services involving payments and other cross-border banking services.

“In the last six years, we’ve built more than 50 bank integrations and now offer payments across 95 countries, payments through a partner network,” he added, with 43 of those offering real-time transactions. From that, it moved on to bank accounts and “other primitive stuff” with card issuance and more, he said, eventually building an end-to-end payment stack. 

Airwallex has tens of thousands of customers using its financial services directly, and they make up about 40% of its revenues today. The rest is the interesting turn the company decided to take to expand its business.

Airwallex had built all of its technology from the ground up itself, and it found that — given the wave of new companies looking for more ways to engage customers and become their one-stop shop — there was an opportunity to package that tech up in a set of APIs and sell that on to a different set of customers, those who also provided services for small businesses. That part of the business now accounts for 60% of Airwallex’s business, Zhang said, and is growing faster in terms of revenues. (The SMB business is growing faster in terms of customers, he said.)

A lot of embedded finance startups that base their business around building tech to power other businesses tend to stay at arm’s length from offering financial services directly to consumers. The explanation I have heard is that they do not wish to compete against their customers. Zhang said that Airwallex takes a different approach, by being selective about the customers they partner with, so that the financial services they offer would never be the kind that would not be in direct competition. The GOAT marketplace for sneakers, or Papaya Global’s HR platform are classic examples of this.

However, as Airwallex continues to grow, you can’t help but wonder whether one of those partners might like to gobble up all of Airwallex and take on some of that service provision role itself. In that context, it’s very interesting to see Salesforce Ventures returning to invest even more in the company in this round, given how widely the company has expanded from its early roots in software for salespeople into a massive platform providing a huge range of cloud services to help people run their businesses.

For now, it’s been the combination of its unique roots in Asia Pacific, plus its vertical approach of building its tech from the ground up, plus its retail acumen that has impressed investors and may well see Airwallex stay independent and grow for some time to come.

“Airwallex has a clear competitive advantage in the digital payments market,” said David Craver, MD at Lone Pine Capital, in a statement. “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. We are excited to invest in Airwallex at this dynamic time, and look forward to helping drive the company’s expansion and success worldwide.”

Updated to note that the coffee business was in Australia, not Hong Kong.

Fivetran, the data connectivity startup, had a big day today. For starters it announced a $565 million investment on a $5.6 billion valuation, but it didn’t stop there. It also announced its second acquisition this year, snagging HVR, a data integration competitor that had raised more than $50 million, for $700 million in cash and stock.

The company last raised a $100 million Series C on a $1.2 billion valuation, increasing the valuation by over 5x. As with that Series C, Andreessen Horowitz was back leading the round, with participation from other double dippers General Catalyst, CEAS Investments, Matrix Partners and other unnamed firms or individuals. New investors ICONIQ Capital, D1 Capital Partners and YC Continuity also came along for the ride. The company reports it has now raised $730 million.

The HVR acquisition represents a hefty investment for the startup, grabbing a company for a price that is almost equal to all the money it has raised to date, but it provides a way to expand its market quickly by buying a competitor. Earlier this year Fivetran acquired Teleport Data as it continues to add functionality and customers via acquisition.

“The acquisition — a cash and stock deal valued at $700 million — strengthens Fivetran’s market position as one of the data integration leaders for all industries and all customer types,” the company said in a statement.

While that may smack of corporate marketing-speak, there is some truth to it, as pulling data from multiple sources, sometimes in siloed legacy systems, is a huge challenge for companies, and both Fivetran and HVR have developed tools to provide the pipes to connect various data sources and put it to work across a business.

Data is central to a number of modern enterprise practices, including customer experience management, which takes advantage of customer data to deliver customized experiences based on what you know about them, and data is the main fuel for machine learning models, which use it to understand and learn how a process works. Fivetran and HVR provide the nuts and bolts infrastructure to move the data around to where it’s needed, connecting to various applications like Salesforce, Box or Airtable, databases like Postgres SQL or data repositories like Snowflake or Databricks.

Whether bigger is better remains to be seen, but Fivetran is betting that it will be in this case as it makes its way along the startup journey. The transaction has been approved by both companies’ boards. The deal is still subject to standard regulatory approval, but Fivetran is expecting it to close in October.

Six months after securing a $23 million Series A round, Ketch, a startup providing online privacy regulation and data compliance, brought in an additional $20 million in A1 funding, this time led by Acrew Capital.

Returning with Acrew for the second round are CRV, super{set} (the startup studio founded by Ketch’s co-founders CEO Tom Chavez and CTO Vivek Vaidya), Ridge Ventures and Silicon Valley Bank. The new investment gives Ketch a total of $43 million raised since the company came out of stealth earlier this year.

In 2020, Ketch introduced its data control platform for programmatic privacy, governance and security. The platform automates data control and consent management so that consumers’ privacy preferences are honored and implemented.

Enterprises are looking for a way to meet consumer needs and accommodate their rights and consents. At the same time, companies want data to fuel their growth and gain the trust of consumers, Chavez told TechCrunch.

There is also a matter of security, with much effort going into ransomware and malware, but Chavez feels a big opportunity is to bring security to the data wherever it lies. Once the infrastructure is in place for data control it needs to be at the level of individual cells and rows, he said.

“If someone wants to be deleted, there is a challenge in finding your specific row of data,” he added. “That is an exercise in data control.”

Ketch’s customer base grew by more than 300% since its March Series A announcement, and the new funding will go toward expanding its sales and go-to-market teams, Chavez said.

Ketch app. Image Credits: Ketch

This year, the company launched Ketch OTC, a free-to-use privacy tool that streamlines all aspects of privacy so that enterprise compliance programs build trust and reduce friction. Customer growth through OTC increased five times in six months. More recently, Qonsent, which developing a consent user experience, is using Ketch’s APIs and infrastructure, Chavez said.

When looking for strategic partners, Chavez and Vaidya wanted to have people around the table who have a deep context on what they were doing and could provide advice as they built out their products. They found that in Acrew founding partner Theresia Gouw, whom Chavez referred to as “the OG of privacy and security.”

Gouw has been investing in security and privacy for over 20 years and says Ketch is flipping the data privacy and security model on its head by putting it in the hands of developers. When she saw more people working from home and more data breaches, she saw an opportunity to increase and double down on Acrew’s initial investment.

She explained that Ketch is differentiating itself from competitors by taking data privacy and security and tying it to the data itself to empower software developers. With the OTC tool, similar to putting locks and cameras on a home, developers can download the API and attach rules to all of a user’s data.

“The magic of Ketch is that you can take the security and governance rules and embed them with the software and the piece of data,” Gouw added.

It’s been a heady 12-18 months for Zoom, the decade-old company that experienced monster 2020 growth and more recently, a mega acquisition with the $14.7 billion Five9 deal in July. That addition is part of a broader strategy the company has been undertaking the last couple of years to move beyond its core video conferencing market into adjacencies like phone, meeting management and messaging, among other things. Here’s a closer look at how the plan is unfolding.

As the pandemic took hold in March 2020, everyone from businesses to schools to doctors and and places of worship moved online. As they did, Zoom video conferencing became central to this cultural shift and the revenue began pouring in, ushering in a period of sustained triple-digit growth for the company that only recently abated.