The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:24:39 · Jack Zhang
[00:24:39] S0: Well, is another funny story. So when I was doing the COVID business and I was thinking about starting AirWallox at the time, and one day I just finished work on Friday. I went to the coffee shop to catch up with Max, another co founder of AirWallox, and I said, I'm going to resign. Let's just do this seriously. And I met a girl who is a friend of Max called Lucy, who just resigned from as an investment banker and wanted to get married and have a family in Australia and just sort of heated up with her. And she's kind of curious about the coffee business. She's like, oh, I want to talk to you more about coffee business and maybe I can invest in this coffee business. And then like we said, oh, let's just grab dinner, right? So we grabbed dinner and then she's like and then, you know, blah, blah, coffee business. I was like, actually, you know what? I'm actually going to really stop keep investing in this coffee business. I'm going to start a new business that really revolutionizing cross border payments and fundamentally changing how money moves around the world. And then she's like, Oh, tell me more about it. And, you know, because I was like, Oh, I have a background in FX, and I'm an engineer, and my co founder was like a genius engineer. You know, I made a pitch. And she's like, How much money are raising? I'm like, Oh, I'm probably going to raise 1,000,000 US. And she's like, What about if I give you 2,000,000? You know, this is a girl that you met for the first time in your life, and you only talked for like less than an hour. And then she's like offering you $2,000,000 I was like, for how much of the company? She's like, I'll give you $2,000,000 for 40% of the company. Initially I was my reaction was like, should I take it serious? But then she's let's really kind of have a deeper conversation in law school tomorrow. So law school is from University of Melbourne because she also went to University of Melbourne. So all four of us went to the same college. She's like, let's meet at like 08:00 tomorrow and we'll go deep on this. I'm like, Okay. So and I feel that she's serious.
00:26:38 · Jack Zhang, Harry Stebbings
So we went to the law school and I remember Saturday, this is like the second day I met her and she basically negotiated with me for three hours by 11:00 and then we agreed that she's going to invest a million because I don't want her own 40% of the company, she's going to invest a million dollar and $5,000,000 post for 20% of the company. And her husband was there strongly against it. And then she's like, we're going to use this money to buy houses and we're going to have a family. You know, what are you doing? She's like, I'm king and I actually wanted to join these guys. And, you know, and she just pushed us through and we just end up agreed verbally that we're going to do the deal. The crazy thing is, this is before even I resigned from my full time job in ANZ, and this is before I even have a company registered. Then like by Monday, I got a text message from my bank account. Like, you got a million US dollar wire to your personal bank account. Like, obviously, I'll give her the bank account, but like I just didn't expect that she would just wire without anything signed. Wow. [00:27:41] S2: And so then you put the paperwork in place and [00:27:42] S0: Yeah. And I... You know, that took like months. Yeah. So like literally I got the money three days over the weekend after the first time I met her. And that ended up probably one of the best investment people ever made. I mean, is like a girl that, I don't know, 25 years old or 24, and never
00:27:42 · Jack Zhang, Harry Stebbings
[00:27:42] S0: Yeah. And I... You know, that took like months. Yeah. So like literally I got the money three days over the weekend after the first time I met her. And that ended up probably one of the best investment people ever made. I mean, is like a girl that, I don't know, 25 years old or 24, and never [00:28:00] S2: made any investment. This is her first investment. On a $9,000,000,000 valuation, if you assume a reasonable dilution, you're turning a $1,000,000 there into a billion. [00:28:11] S0: Yeah. I mean, it's it's crazy. And I kind of just I'm gonna [00:28:14] S2: give her some advice. Yeah. She's listening. Stop investing. You will never make such a good investment again. You've reached the high. That is insane. [00:28:23] S0: I think she made a few other investments and then didn't turn out to be good afterwards, and I think she stopped investing. [00:28:30] S2: That is insane. Oh my gosh. Okay. So you get a million wired to your personal account, which nowadays would be like, you know, a challenging compliance problem, by the way. But you have a million wider account and you get to work? What happens then? [00:28:45] S0: I resigned. I literally got the money and I resigned the same day. [00:28:53] S2: I love this. So you resign, you go to Max, and you're like, right. Let's do this. Let's get to work on our wallets.
00:28:53 · Harry Stebbings, Jack Zhang
[00:28:53] S2: I love this. So you resign, you go to Max, and you're like, right. Let's do this. Let's get to work on our wallets. [00:28:59] S0: Yeah. And I... There's a fifth co founder, which is Kellogg, and I used to work together. I basically, you know, like, kinda forced him to resign because he was, like, got three kids, you know, like a lot of obligation. And he's the best one of best engineers I know. And we worked together in National Australia Bank. And so basically me, Max, and Lucy, we just like went to the downstairs of the net building. Was like, we're not going to leave until you resign. So go resign. And she was stuck there for two hours talking to his manager, which is also my previous manager. And I was like, I know that you're going get returned because you're of the best engineers they ever had. But, dude, we're not gonna leave until you resign, whatever that time is. So go go fucking get resigned. And he did. [00:29:45] S2: Deal with your wife, Lacey. [00:29:46] S0: We kinda, like, literally forced him to to resign. [00:29:50] S2: Were you nervous at all about leaving the safety net, going all in on Airwallex? Was there ever a part of you that was like, this is real. I'm leaving security. [00:29:58] S0: Yeah. I mean, like... And also, like, early days, I also went, like, all in. Right? I just... We just live in, like, a 10 square meter office. We sleep in a sleeping bag, and we're just working there twenty hours a day running cold. [00:30:11] S2: You slept in a sleeping bag?
00:30:11 · Harry Stebbings, Jack Zhang
[00:30:11] S2: You slept in a sleeping bag? [00:30:12] S0: Yeah. Me and Max and Jacob, three of us literally obviously, kind of hard for Lucy, the girl, to fit in. But three of us will literally and Max, actually four of us, and we'll we'll just, like, leave in the office. [00:30:24] S2: Okay. So we've got a million dollars. You've got the four of you, and now you're just building product at this stage. Correct? [00:30:30] S0: And then raising money, because I don't think the million is enough. [00:30:32] S2: Yeah. The million is not gonna get you very [00:30:34] S0: Yeah. So we we raised another $2,000,000 from a VC in Hong Kong because all the all the VCs kind of rejected me in Australia. It was only three VC. It's so funny, though. [00:30:44] S2: Let's just go to that. Sorry. Australian VCs rejected you. So what happens? You go out, you don't have product at this time, but you've got the million dollars from Lucy. And so you're like, hey. I'm Jack, and I'm doing AirWallocks. What happens?
00:30:44 · Harry Stebbings, Jack Zhang
[00:30:44] S2: Let's just go to that. Sorry. Australian VCs rejected you. So what happens? You go out, you don't have product at this time, but you've got the million dollars from Lucy. And so you're like, hey. I'm Jack, and I'm doing AirWallocks. What happens? [00:30:55] S0: Yeah. Basically, I went out to pitching the idea of building a new foreign exchange and money movement network. A lot of people think I'm crazy. And one of the VCs actually believed in and actually wanted to write a check and lead the round. But I think one of the founders of the VC, that is Matrix Partners, and they give the term sheet they signed and they took it back. Yeah, so they basically said, I had a call with the founder after they signed the term sheet and they were like, oh, I don't think this algorithm thing going to work and that's not a defensibility anyway. And yeah, so they basically took it aback. [00:31:34] S2: What deal did they have on the table? [00:31:36] S0: That was $10,000,000 post. So $2,000,000 $8,000,000 pre. And I literally like rejected all the other VC already by that time, and the only one I haven't rejected is this Gobi VC and from Hong they end up putting $1,000,000 and plus other smaller VCs that are putting the $2,000,000 together. [00:31:56] S2: That is a billion dollar pullback. [00:31:58] S0: Yes. I mean, they should have closed the deal as they signed the term sheet. [00:32:02] S2: They signed the term sheet? [00:32:03] S0: Yeah. They [00:32:04] S2: signed. Wow. Yeah. That's appalling. That's bad bad. Yeah. Okay. And so we have