Discover more from AfterWork Reading
Investment Notes: Send - a highly-integrable, partnerships-led, FX provider
Our Investment Notes deep dive into our investment decisions. We unpack what we loved, where we needed to build confidence, and how we ultimately gained conviction to invest.
We have sunsetted the AfterWork Ventures Substack. The original post can be found on our website here.
If you’ve ever had an international payment go astray, you’ll relate to the experience of anxiously pacing outside the Western Union of a foreign country, praying for a miracle. If you’ve ever had a big payment go awry, particularly if you’ve just moved your family and worldly possessions halfway across the world, you’ll relate to the cold sweats and sleepless nights associated with not knowing where your hard-earned life savings are.
In such moments, there is no balm more soothing than a reassuring voice on the phone, who can tell you exactly where your money is, what happens next, and when you can expect to see it land safely in your new account.
As people who have lost more than a few night’s sleep to the agony of an MIA international transfer, we were excited to get to know Send Payments.
Built by Paul Billing, Ian Cragg, and Alexandra Rofe, Send Payments provides a gold-plated foreign exchange (FX) service that is available to customers in platforms they’re already using, via brands they already trust.
What we loved about this investment opportunity
Every company is becoming a FinTech company
Angela Strange, a FinTech partner at Andreessen Horowitz, predicts that “in the not-too-distant future, nearly every company will derive a significant portion of its revenue from financial services”.
For companies, adding financial services to their product suite not only represents another way to monetise the customers they’ve gone to such efforts to acquire, but also helps them to pull their customers further into their ecosystem, making their overall offering stickier.
But the infrastructure required to provide financial services cannot be spun up overnight. This means there is a huge opportunity for companies to provide financial services infrastructure as a service. For example, Upstreet, powered by Cache, is a plug-and-play service that empowers brands to award fractional shares to customers whenever they buy a product. This helps brands to increase customer loyalty, by giving customers ‘skin-in-the-game’ of the very companies they shop from.
Send is tapping into an opportunity to provide FX-as-a-service. It has already partnered with trusted brands such as Flight Centre, Qantas, Crown Relocations, and Woolworths Team Bank to provide customers a gold-plated FX experience, within the partners’ very own platforms.
A unique partnerships-led GTM
Send has partnered with an impressive number of trusted brands, with a particular focus on companies providing other services to customers who are travelling or relocating overseas, or who regularly remit their salaries to their families back home.
Send’s currency transfer solution fits into these brands own platforms seamlessly, with an easy plug-and-play API integration. Send’s profit-share model with referral partners incentivises brand partners to encourage its customers to use Send as a preferred FX provider. In turn, Send’s white-glove FX service enhances the overall customer experience, during an often-frenetic time in customers’ lives.
“Through our partnership with Send, we’ve enhanced our employer value proposition by providing transparent, innovative solutions to our loyal Woolworths team members and their families”. - Rod Attrill, CEO of Woolworths Team Bank
By leveraging their partner’s brand equity, customer loyalty, distribution networks, and audiences, Send have found an effective, low-cost route to ‘turn up’ in the lives of customers needing to make FX transactions.
Send’s product can be adapted to match its partners’ needs – partners can white-label Send in its platform, use a custom turnkey integration, or become a referring partner. Send can also add on bespoke elements such as mobile apps and travel cards; its flexible infrastructure allows Send to customise solutions to match their partners’ needs.
The gold standard in customer support
Send has a 4.7 customer rating on Trustpilot from more than 100 reviews. Many of these customers are making high-value transfers, including to purchase their new homes. Others regularly remit large portions of their income to their relatives overseas.
The common strand through Send’s reviews is praise for its customer service: customers really appreciate being able to get a ‘real person’ on the phone, who can guide them through every step of the process with professionalism, efficiency, and empathy.
Like Send, we believe that teams that invest heavily in customer care in the early stages win the right to become a lifelong service provider to customers.
A mind-bogglingly huge market, with many niches still underserved
Cross-border payment flows are expected to reach $156 trillion USD by 2022, and is growing by 5% every year. Although there’s been a recent spate of disruption by FinTechs, more than 90% of the total volume of cross-border payments is still done through banks. Banks’ legacy systems are slow and clunky - customers suffer a lack of transparency, long settlement periods, and limited accessibility, and are in search of better options.
Send’s automated front-end, combined with a gold-plated service layer for complex and high-value transactions, serves an admittedly niche market. But within a $156 trillion USD vertical, a dominant position within a niche can still represent a venture scale business.
The challenges we saw
An abundance of competition
FX has been the bread-and-butter of banks for centuries, and the list of startups disrupting the FX space is already long and star-studded. Airwallex represents an Australian startup that’s rocketed to success, while international players Wise and Revolut have also entered the Australian market.
Send differentiates most other FX players with its B2B2C proposition – in addition to serving businesses with their transactions, Send allows partners to add a ‘string in their bow’ by offering a customer-facing FX proposition.
Additionally, we believe Send’s maniacal focus on its best-in-class white-glove concierge service, that is available for all its customers, including those accessing Send via an affiliate partnership, will earn Send the right to be the FX service of choice for important moments in their financial lives.
Ultimately, we gained comfort that cross-border payments is a large enough vertical that multiple venture scale startups can exist, as long as their proposition is highly appealing to their particular niche.
Thin FX margins, and a race to the bottom
The conventional wisdom states that FX is a race to the bottom; price competition is fierce, and customers are starting to expect 0% transaction fees and the slimmest of FX spreads. This conventional wisdom would suggest that those with the greatest number of offsetting flows and those willing to sacrifice margin for scale will dominate. Many FX players run on razor thin margins and endure high customer acquisition costs.
We believe Send’s partnerships-led go to market elegantly sidesteps some of these competitive dynamics. Send’s partners have already put in the hard yards to acquire a highly relevant customer base. Through the profit-share agreement, Send’s partners are financially incentivised to encourage these customers to use Send for all their foreign currency and international transfer needs. In having a customer base skewed towards those seeking high-value or regular transactions, Send can afford to invest heavily in a superior customer experience, because this customer segment is willing to pay for reliability and peace-of-mind. In turn, a superlative customer experience earns Send the right to help customers make larger transactions that are more lucrative for Send.
The questions we had for the team
What are your priorities for the next 12 months?
The Send team plan to focus on pushing their partnerships-led flywheel – growing the network of partners, educating these partners on the benefits of the Send product, working with partners to deploy a bespoke version of the Send service to their end customers, building trust with end-customers, and building out security and compliance functions so Send can ensure that its customers have utter peace-of-mind.
The team have laid the groundwork to scale the volume coming through its platform and look forward to iterating the model as it grows.
How will you approach overseas expansion?
The Send team has ambitions to commence trading in New Zealand, Singapore, India, the Philippines, and the UK by 2023. Send already has a foothold in these markets via its network of multi-national partners, providing access to customers all over the world.
We believe Send’s modular tech stack will also represent an advantage when it comes to setting up in new geographies and meeting the licensing requirements for each country. Send plugs into third party tools such as Frankie, an API integration which handles KYC (know your customer), AML (anti-money laundering) and fraud detection. Instead of building bespoke processes for customers in each geography, Send is set up to use relevant third party tools to meet the requirements of each new country.
How we got conviction
Over the three months we got to know the Send team, we got a privileged glimpse of their flywheel beginning to turn. The team doubled their monthly revenue, added 15 more referral partners, and closed two large enterprise agreements. We also used Send for AfterWork transactions, and experienced first-hand the sense of ease, reliability, and peace-of-mind inspired by Send’s service.
Post investment, the AfterWork team met in Sydney with Ian Cragg, Send’s co-founder and Business Development and Partnerships lead. Ian had come down from the Gold Coast to attend an international mobility conference – a niche gathering of individuals working in the international mobility support function at multinational corporations. We loved seeing Ian in his element, hustling hard to win highly tactical partnerships, to earn the right to meet customers in the moments they need Send most. We admire Send’s hustle and unwavering focus on customer excellence, and we’re excited to be along for the ride.