Investments

Flywire CEO On $100M Capital Raise

The definition of a really good day: Raise $100 million led by a company that not only has obviously deep pockets, but a deep presence in a vital part of the world for payments and the digital economy. That really good day was enjoyed by Flywire yesterday (July 26).

Flywire, a global payments company that makes it easy for businesses to manage cross-border receivables by streamlining how businesses and consumers pay them, announced that it had closed its Series D $100 million funding round led by Singapore-based investment company Temasek. The round also included the participation of existing Flywire investors Bain Capital Ventures and F-Prime Capital.

Flywire has 1,400 clients in education, healthcare and business, and has processed $8 billion in payments volume as of this funding round. Those numbers provide part of the story about why Temasek and the other investors opened their checkbooks  wide  for Flywire.

For one reason, the payments company has developed a specific offering and expertise in B2B payments that intrigued the group of investors, CEO Mike Massaro told Karen Webster after the news broke. Geography is another reason. Flywire already has a significant penetration in China — 28 percent of the company’s volume comes from that country. That’s an important beachhead for anyone looking to make money from the ongoing growth of digital payments, including B2B transactions, in that massive economy.

Temasek Impact

Temasek was incorporated in 1974 and owns a portfolio worth about $235 billion. It has a significant focus — along with the connections and reputation — in Asia. The company also has deep pockets and a devotion to FinTech. Earlier this year, for instance, it teamed up with PayPal to make an investment in Pine Labs of India, which provides point-of-sale (POS) technology, in a funding round worth $125 million. Last year, Temasek took part with JPMorgan Chase in a funding round that raised $100 million for Bill.com.

Flywire, meanwhile, has been expanding operations in such countries as Singapore, China and Japan (along with Australia and Ireland), and its association with Temasek promises to pay dividends in Asia, at the least. In the Asia-Pacific region, for instance, Flywire said that the past 12 months has brought growth of at least 170 percent there. Additionally, 65 percent of Flywire’s business originates in Asia, Massaro told Webster during the Thursday interview.

“You could not pick a better investor,” he said. “They were just our top pick, and it was great to get it done in a short period of time.” In fact, he said, the investment required only 10 weeks to secure, as measured from the end to end of the deal.

Flywire “has consistently outperformed expectations and demonstrated its ability to run and grow a global business at scale,” said Matt Harris, managing director at Bain Capital Ventures, in a statement. “The addition of Temasek optimizes their ability to capitalize on that opportunity and provides really valuable insights into the fast-growing Asia-Pac market.”

China Opportunities

The education and healthcare payment markets in China present notable opportunities for Flywire growth, Massaro said. The growth in those areas — he said China now stands as one of the top educational destinations in the world for college students, for instance, an obvious opportunity for globally-inclined providers of payment services — could lead to new products and new revenue streams for Flywire, anchored around payment inflows instead of outflows.

There is little doubt in Massaro’s mind that China holds significant “unlocked potential” for the payment activities that Flywire serves.

In a more general sense, the $100 million infusion of capital will help Flywire grow around the world, and not only in the countries where it has a relatively long presence — look for some Flywire acceleration in the United Kingdom and United States, based around its OnPlan Holdings acquisition from earlier this year, he said. OnPlan helps U.S. institutions stay on top of their receivables by enabling payment services for their students and patients.

Flywire will increase its focus on emerging markets, such as Latin America, the Middle East and Africa. The company also plans to do a “big hiring spurt,” including the addition of workers focused on compliance and other areas, Massaro told Webster. He said the company’s multi-year white labeling offering for financial institutions (FIs) could also be fast-tracked by the new capital.

Might the funding from Temasek and the other investors open the door for other Flywire acquisitions? Massaro would not rule it out, including for a unique opportunity that may stretch the limits of this current round.

“If we find a deal that is significantly larger than what we would normally do ourselves,” Massaro told Webster, “we know we have the full depth of the investor group behind us.”

No matter the exact path of all that capital, the simple news of this investment will surely pay quick dividends for Flywire.

“We’ve raised our profile significantly over the last couple of years,” Massaro remarked. “But this puts us on the map.”

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