The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
01:06:12 · Harry Stebbings, Jack Zhang
[01:06:12] S2: You knew it was [01:06:13] S0: really I knew it was really, really bad because I have employees in China, and RISE is like a shutdown the whole city and all this crazy stuff. I even wrote a text message to the prime minister of Australia to shut the border from China. I remember that the week that the day we actually the week we actually closing the Series D, The US stock market tanked more than ten percent three times. This is the first time ever happened in The US history. So the market went down 30%. I called Niushan, and I was like, Do you think Ian's going to close? And would you close if you are in this situation? And Niels told me he's really not sure. He's like, No one would know in this situation. It's like never happened before. I wasn't sure, and nobody was sure. To the credit of Ian... I mean, Ian closed. [01:06:54] S2: What was that round? [01:06:56] S0: That was, I think, 1.7. This is like the round after the convertible, so that all the people that invest in a convertible get converted to the $1,700,000,000 round. [01:07:04] S2: $1,700,000,000 How big was the check? [01:07:06] S0: I think was $150 Obviously, half of that is existing, and Ian put in $75 or $80 M. [01:07:14] S2: How is Ian? He's very behind the scenes, he's very discreet. [01:07:19] S0: He is. I mean, Hirosofia is a very secretive phone, and we weren't allow to put a PR using the Hedosophy name. So you would see a bunch of investors led the Series D, but Hedosophy was not named. I think they changed the policy now.
01:07:19 · Jack Zhang, Harry Stebbings
[01:07:19] S0: He is. I mean, Hirosofia is a very secretive phone, and we weren't allow to put a PR using the Hedosophy name. So you would see a bunch of investors led the Series D, but Hedosophy was not named. I think they changed the policy now. [01:07:32] S2: Yeah, they have done. They're much more public. Yeah, they're a [01:07:34] S0: little bit more public now. But yeah, I think Ian's sitting on my board and he's one of my largest investors and not many people know about it. [01:07:41] S2: Has he been a great board member? [01:07:43] S0: Yeah. I mean, he's been investing in the company from 2019 for like five, six rounds after that. He just keep doubling down. So I think we're probably one of the largest investment of Hidosofia in terms of dollar amount. [01:07:55] S2: So you close that, we get going again. Yes. We keep plowing away at these international markets. We are fucking relentless, bashing product market fit in them. And we fix it. It starts looking really good. When does the business really start humming? [01:08:08] S0: I mean, 2020, obviously during COVID, our revenue went halved. That's why we weren't sure whether we're going to close. Because half our revenue is from tuition and travel, right? And all this tuition What's your revenue at that point? Scrub acquisition at that time, we were only $2,000,000 in 2018. So we went 10,000,000 in 2019. So we five times the revenue in 2019, so 10,000,000. Then 2020, we had 20,000,000. '21? '21 that we went more than doubled again. [01:08:38] S2: Wow. In COVID.
01:08:38 · Harry Stebbings, Jack Zhang
[01:08:38] S2: Wow. In COVID. [01:08:39] S0: 2020, we doubled. Right? So that's where COVID. And 2021, we [01:08:42] S2: more than doubled. We're kind of 2.5 x. Fuck. 2,000,000 in revenue when Stripe did the 1,200,000,000. [01:08:49] S0: Yeah. And then crazy assent, no. [01:08:54] S2: No. No. No. Now you look like a genius. But if I was a VC on your board, Dan, I would be supportive if you wanted to sell. Well, I mean, from a [01:09:04] S0: Sequoia point of view, Dan, they invested $4.80 only for three months, and they made under double the money because the 800,000,000 on the cap table, [01:09:12] S2: right? Dude, I totally get it. It does not do much for them in that respect. And their fund size, totally. Okay. So we closed ahead of Saphir. We're off to the races. What happens now?
01:09:12 · Harry Stebbings, Jack Zhang
[01:09:12] S2: right? Dude, I totally get it. It does not do much for them in that respect. And their fund size, totally. Okay. So we closed ahead of Saphir. We're off to the races. What happens now? [01:09:22] S0: Then COVID happened, right? So that we lost half our revenue, and we were really figuring out what to do. At that time, we start getting product market fit on the SMB banking portal. You know, we build the infrastructure. We started to issuing corporate cards. We start getting the merchant acquiring thing kind of build it out, but ultimately launching 2021. The foundation of a global bank started to evolve. I was the first three, four years of just basically building the best money moving infrastructure in the world to build the next generation of a global bank, right, build the future of a global banking. And that obviously took a lot of money, a lot of got to bet on this new product that only start generating revenue from 2022. So from 2019, 2020, 2021, there's no revenue for all this new product. Only from 2022 that's not generating revenue. [01:10:09] S2: So Were the board putting pressure on you because there's a lot [01:10:11] S0: of results? Well, the business is doubling every year from the existing product. And then 2021 happened. And I just got investor knocking on the door every single day, right? So Grand Oaks led a round in January 2021 for 2,600,000,000 LonePilot led a round in June, July at $4,000,000,000 [01:10:30] S2: Dude, I'm not being rude. Do you have any of the company left? This is a lot of funding rounds.
01:10:30 · Harry Stebbings, Jack Zhang, Harry Stebbings
[01:10:30] S2: Dude, I'm not being rude. Do you have any of the company left? This is a lot of funding rounds. [01:10:35] S0: Yeah. We we raised $400,000,000 in 2021. Like, the valuation went from 1.7 to five and a half. Like, every month I'm raising money, basically. Like, then you raise, like, three rounds. And end of twenty twenty one, SoftBank was talking to me about, you know, leading an $8,000,000,000 round. And obviously, we didn't entertain that conversation. [01:10:53] S1: Do you [01:10:53] S2: not worry about the dilation? [01:10:54] S0: At that time, I know the vision is really big. How much capital is required to build a global bank? It's going to be in a balance. I just want to raise as much money as I can. And obviously, I only raised like 100 out of 5.5. I should have raised like more at a time. But I think Air Wallets will be dead without 2021. We raised $400,000,000 We're really well capitalized. The business kept doubling. And we had enough money just to keep going. And obviously, we raised a flat round in 2022 because at that time, we were burning close to $200,000,000 a year. And we weren't really sure how long we're going to last. But we weren't profitable in 'twenty three. And I just realized that we can just keep growing the business. We keep and then even in 'twenty two, 'twenty three, we keep doubling the business. And we keep doubling the business while our headcount is not growing. So we never did a layoff. And we able to continue to grow the business more than 100%. So we basically never grow below 100% from 2015 to 2023.
01:10:54 · Jack Zhang, Harry Stebbings, Harry Stebbings
[01:10:54] S0: At that time, I know the vision is really big. How much capital is required to build a global bank? It's going to be in a balance. I just want to raise as much money as I can. And obviously, I only raised like 100 out of 5.5. I should have raised like more at a time. But I think Air Wallets will be dead without 2021. We raised $400,000,000 We're really well capitalized. The business kept doubling. And we had enough money just to keep going. And obviously, we raised a flat round in 2022 because at that time, we were burning close to $200,000,000 a year. And we weren't really sure how long we're going to last. But we weren't profitable in 'twenty three. And I just realized that we can just keep growing the business. We keep and then even in 'twenty two, 'twenty three, we keep doubling the business. And we keep doubling the business while our headcount is not growing. So we never did a layoff. And we able to continue to grow the business more than 100%. So we basically never grow below 100% from 2015 to 2023. [01:11:53] S2: Never grew below 100% for eight years straight. [01:11:56] S0: Yeah. Fuck. And we're still growing 90% year on year last quarter. [01:12:00] S1: You grew 90% last quarter. [01:12:02] S0: Yeah. We went to, like, $500,000,000 ARR in August last year, then hit, like, 600 in November and 700 in sort of January and February. And the business just can still grow insanely fast.