The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:39:44 · Harry Stebbings, Jack Zhang
[00:39:44] S2: That's helpful. [00:39:45] S0: Thanks. Yeah, that's helpful. I'm like, Dude, like, well now, you know, Barclays is a great partner, but, you know, we only start working together when I have like $10,000,000,000 volume or something, you know? You know, and Tom, the guy who took my Coca Cola, now is the head of distribution in Macquarie. [00:40:00] S2: Phenomenal pick from him. Okay. And so we have that. Do we have product market fit pretty much straight away post that? [00:40:07] S0: No. And I got the FX engine, build it out, and I need, like, a bunch of payment rails. So I connect to a bunch of, you know, aggregators initially because I need the coverage and then I even connect to Currency Cloud who ultimately become a competitor later. Essentially, connect to a bunch of competitors ultimately to get me the coverage of the network. And have the product going, but in terms of the customer we want to target to, we're initially targeting SMEs in Australia. We just never really figured out what the product is. We built an invoicing product to allow SME to sell around the world to get paid through a payment link and then by kind of integrating with a bunch of payment service providers. And we just never really get product market fit on that product. It's because the acquisition is too high of SMBs and we never really got product market fit. At that point, we kind of know we need to raise more money, otherwise we're going to be dead. So we basically went to raise money from Sequoia and Tencent with a product we know it's going to fail.
00:40:07 · Jack Zhang, Harry Stebbings
[00:40:07] S0: No. And I got the FX engine, build it out, and I need, like, a bunch of payment rails. So I connect to a bunch of, you know, aggregators initially because I need the coverage and then I even connect to Currency Cloud who ultimately become a competitor later. Essentially, connect to a bunch of competitors ultimately to get me the coverage of the network. And have the product going, but in terms of the customer we want to target to, we're initially targeting SMEs in Australia. We just never really figured out what the product is. We built an invoicing product to allow SME to sell around the world to get paid through a payment link and then by kind of integrating with a bunch of payment service providers. And we just never really get product market fit on that product. It's because the acquisition is too high of SMBs and we never really got product market fit. At that point, we kind of know we need to raise more money, otherwise we're going to be dead. So we basically went to raise money from Sequoia and Tencent with a product we know it's going to fail. [00:41:07] S2: What happens? So basically I have
00:41:07 · Harry Stebbings, Jack Zhang
[00:41:07] S2: What happens? So basically I have [00:41:09] S0: a product that's working, right? I know it's not going to have product market fit, but I need more money to figure out what the product market fit is. And I basically went to pitch for Sequoia and Tencent And one of the ideas is actually to pivot the product to API product to servicing Tencent to kind of power WeChat Pay global settlement. So you know when Chinese tourists come to London Airport, they will pay using WeChat. In some way, it will settle the merchants doing the FX on the back of that. And we were thinking we can do a lot better over the SWIFT network, and we can do a lot better than Tencent Treasury Department. And the idea is to maybe that's an opportunity to pivot and leveraging Tencent's volume to grow the business. And then knowing that the SME product probably going to fail because we haven't we only got like 100 customers by that time. And we were raising at a $60,000,000 valuation with no revenue. [00:42:03] S2: But how does that work? You know that this isn't working. You know that it's not going to work and you're going to have to figure it out. And so you go to Sequoia and you pitch what? Ideas or... Well, pitched [00:42:16] S0: a vision. I pitched a vision of building the largest payment network in the world, alternative to SWIFT. And that fundamental infrastructure is going to be so important and that's going to take years to build. That's why we don't have any revenue. [00:42:30] S2: How did it go? How did the meetings go?
00:42:30 · Harry Stebbings, Jack Zhang
[00:42:30] S2: How did it go? How did the meetings go? [00:42:32] S0: And then, obviously, I pitched Tencent the same time, and I I told Sequoia, Tencent might wanna lead the round and kinda play the, you know, the kinda competition game. And and Sequoia be like, yeah. If Tencent's, like, co leading the round, we're in. But then like Tencent did all the IC and everything past IC. At one point, I was super happy this is going to be done. And the founder of Tencent said, you know, just go through like a normal corporate approval process, and the founder of Tencent didn't approve. After three months process, RCO passed, he just basically is like because the idea is that this is going to help Tencent to do global WeChat Pay settlement. And then Pony, the founder, was like, why can't we do it ourselves internally? I mean, why like a 10 people startup can do a better job than us? Know, like we have hundreds of thousands of engineers. And then the investment team didn't know what to say. [00:43:27] S2: So what happened?
00:43:27 · Harry Stebbings, Jack Zhang
[00:43:27] S2: So what happened? [00:43:28] S0: So basically that was just stalled, the deal was stalled and Sequoia was not willing to invest until Tencent kind of make a decision and are basically running out of money. The Tencent investment team was just super helpful. They were like, you have one opportunity to pitch to either the president, Martin Liao, or James Mitchell, the chief strategy officer. These are the two people who can convince the founder of Tencent to invest, to kind of basically approve the deal. And I basically waited for almost three months to able to have a time slot to meet with James and Martin. [00:44:00] S2: How did that go?
00:44:00 · Harry Stebbings, Jack Zhang
[00:44:00] S2: How did that go? [00:44:01] S0: And I remember, like, I basically met with James Mitchell in Hong Kong in 01/05/2017. And I told my team, you know, this would be the most important meeting of my life. And I test the product, everything until like 3AM. And I kind of told my CTO nothing can go wrong during the meeting. I went to pitch. It's so funny that James Ashley was at Goldman before. And he did the RPO of PayPal. And he remember a majority of the revenue of PayPal actually coming from cross border payments. And he kind of didn't really need me to convince him that much. And he kind of sort of convinced him this is like a large enough market and this is a good guy to kind of chasing the opportunity. And he's like, Oh, why don't I just take a look at your product? I was like, Yeah, let's do that. And I demoed the invoicing product, which I know is going to fail, not going to have product market fail. But it's a working product, right? It's a prototype leveraging the same the infrastructure is the same. And I got a four zero four on the spot when I clicked the pay button. And my face just went like blue. And I dodged it. I was like, maybe the link was blocked by the Tencent firewall. Maybe it is, maybe it's not. I mean, we never actually found it out because at that time, the PSP we are using under the HUD also had some bugs. You know, we didn't know if it's the error caused by the underlying PSP was all caused by really the Tencent firewall. We never know. [00:45:24] S2: And he loved it? What happened with that?