Saturday 25 November 2017

Collison brothers will need a major war chest even as they play it safe with push into Asia

Limerick-born brothers Patrick and John Collison of Stripe move into Asia through the financial hub of Singapore
Limerick-born brothers Patrick and John Collison of Stripe move into Asia through the financial hub of Singapore

Irish-owned Stripe has finally marked its official arrival in Asia with the opening of a Singapore office.

After expanding to two dozen countries across the globe, it makes sense for the San Francisco-based payments provider to pick Singapore as its launchpad for an assault on Southeast Asia.

The city-state is already the latter's financial hub, and it plays host to numerous startups that are attempting to tackle e-commerce in neighbouring countries.

But settling in Singapore is no guarantee of an easy ride as central banks and finance ministries in the region grapple not only with how to deal with the potential interruptions to their own financial systems, but whether or not they should even make such approaches possible.

While Singapore has tried to make it simple to start a company, and e-commerce is flourishing, that ease-of-business can't be boxed up and shipped across borders. Central banks, for example, aren't so eager to make life easy for anyone seeking to transfer funds internationally. At the same time, the city is facing a crowded market with players including Braintree and traditional service providers, Bloomberg News reports.

Meanwhile, Rocket Internet learned that Asia is no place for the squeamish when it was forced to sell most of its stake in e-commerce business Lazada to Alibaba, according to this account by TechCrunch's Jon Russell.

As Bloomberg analysts Leila Abboud and Chris Hughes pointed out at the time, Rocket was lucky to exit with money in its pocket.

With the backing of a pair of PayPal mafiosi - Peter Thiel and Elon Musk - Stripe's founding Collison brothers aren't likely to be naive about the challenges ahead, which is why establishing a foothold in Singapore first is a wise move.

Stripe has raised close to $290m and had a valuation of $5bn by the time of its last funding round in December, according to CB Insights.

Stripe revealed last autumn it had received an investment from Visa as part of its funding round.

Visa, the world's biggest payments network, also announced a partnership with Stripe to help fuel the startup's global expansion.

Unlike PayPal's Braintree, Stripe doesn't compete directly with credit card companies.

The company makes it easier for websites and mobile applications to process credit cards and other third-party forms of payment.

Stripe now has a hefty war chest, but with expansion in Southeast Asia a likely next step, those bulging coffers will probably need replenishing sooner rather than later. (Bloomberg View)

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