The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
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?
00:45:24 · Harry Stebbings, Jack Zhang
[00:45:24] S2: And he loved it? What happened with that? [00:45:27] S0: No, he's just like, Oh, you know, it doesn't matter. And then he actually went ahead and I thought it's like a gone, the deal. But he actually went to commence Pony to invest. So we got the investment the day after that. Wow. And then, obviously, you know, Sequoia and and then Mastercard also came in with Tencent. [00:45:44] S2: Do you mind that Sequoia will, like, oh, we'll only invest with Tencent? I I like investors who are conviction driven. I don't give a shit who's investing with me. I'm investing because I love Jack. [00:45:53] S0: Well, I mean, this is Series A, right? This is not a seed round. This is Series A. Normally, people will have product market fit and have zero revenue. So the idea was that Tencent is to give me revenue. And Mastercard was also in the round, and Mastercard is supposed to give me revenue as well. So Sequoia's revenue conviction are based on to the other investor, which is Tencent and Mastercard, supposed to be the two biggest, largest customer for us. [00:46:17] S2: Was that the first near death experience that you mentioned earlier?
00:46:17 · Harry Stebbings, Jack Zhang
[00:46:17] S2: Was that the first near death experience that you mentioned earlier? [00:46:21] S0: I would say the second one. Because the first one was, you know, the VC that kind of supposedly invest, together with Lucy, they didn't wire the money until like five months later after they signed the term sheet. So they were basically like, show me the demo, show me the demo before they wired the money. I mean, is like 2015, so the market is a bit... I don't... I think, you know, it would be a bad thing for any VC to do that today. [00:46:45] S2: It is, but it's not that long ago. Like, it's only nine years ago. Agree with you totally, but it's not twenty years ago. Yeah. [00:46:51] S0: I bought out that investor in this round, by the way. I'm very happy about it. [00:46:55] S2: Yeah. I I know that investor is a good one to buy out. So, yes, completely. Okay. So we raised this money. We've got Tencent. We've got Mascot. We've got Square. This is the fucking dream cap table now. Does it just go off to the races then? Like, is it like rocket ship from there?
00:46:55 · Harry Stebbings, Jack Zhang
[00:46:55] S2: Yeah. I I know that investor is a good one to buy out. So, yes, completely. Okay. So we raised this money. We've got Tencent. We've got Mascot. We've got Square. This is the fucking dream cap table now. Does it just go off to the races then? Like, is it like rocket ship from there? [00:47:10] S0: No. As I said, I mean, we we supposed to have, you know, Mastercard and Tencent as a customer. The Tencent deal took me three years after that point. It's big corporate, right? It just take a long time. The same thing from the WeChat pay department. They were like, why can't we build it ourselves? So they end up built like essentially what AirWatch built themselves and only using us as one of the liquidity providers. So that was really not the product we want to sell to them. And we just become like one of vendors they have together with JPMorgan and other liquidity providers. And Mastercard's supposed to give us a billion dollar volume from the Mastercard Send product, but we got less than a million dollar. And it's just so much high risk transaction at the time. We had to literally offboard that part of the business. So when does it start [00:48:00] S2: to go really well, Jack?
00:48:00 · Harry Stebbings, Jack Zhang
[00:48:00] S2: to go really well, Jack? [00:48:01] S0: Essentially, is like the third year I'm starting the company. Like 2015 started. Like I started a bit late, like December 2015. So 2016, the peer to peer algorithm failed. The invoicing also failed in 2017. And 2017, I raised the money from the Mercedes A and started pivoting the product to an API driven product to sell to large enterprises for kind of global money movement. And then Tencent and Mastercard are supposed to be the customer. And we build a product for a whole year, we end up not getting any customers. And then we're running out of money again because we were very aggressive hiring. And so by end of twenty seventeen, we're also running out of money. That's where SquarePak came in. So I started the business one of the inspirations is because of the founder of SquarePak. And he also one of the most famous entrepreneur in Australia, he started one of the biggest tech company in Australia called seek.com.au, which is like the largest job marketplace in the world at one point. He was the idol of any entrepreneur in Australia, right? So I admired him for a long time. And Paul reached out, said, we like to have a conversation. And we really kind of had a great conversation. He liked the vision, the mission of the company, and he ended up leading a Series A extension. Another $6,000,000 essentially gave us the bracing room to really take off the business. [00:49:19] S2: And that was on the vision too? [00:49:20] S0: To build an alternative to SWIP to the largest global payment On