Stripe Atlas’ hidden benefit: unlocking US VC money to startups everywhere
By David Corbin for techinasia
“If you were Stripe, what would you do in Asia?” His voice was steady, polite.
With a practiced air of brilliance, I rattled off a variety of pain points and solutions. Ever eager to impress, I may have even suggested a scheme to create a new regional currency.
John Collison, co-founder and president of online payment firm Stripe and my BFF for the better part of an hour last summer, took my suggestions in stride. Yes, he agreed, there were great possibilities throughout Asia which Stripe hoped to work on. The depth of that understatement was revealed last week when his company unveiled Stripe Atlas.
The new initiative makes it possible for entrepreneurs to incorporate in the United States with a US bank account and tax ID. A Stripe account is included for receiving payments. Additional tax, legal, and technical support are also included. The whole bundle comes in at US$500. It looks like a boon for startups around the world.
“Incorporating and setting up accounts is really a waste of time for founders. I am really excited that they make this process easy and affordable,” says Hiro Maeda, partner at Beenext, one of eight accelerators and incubators in Asia which are Stripe Atlas launch partners.
For all the benefits bestowed on entrepreneurs, it bears noting that Stripe bypasses a messy situation as well. Speaking from experience, gaining regulatory approval for operating a payment service often requires years of preparation and months of praying as your application is reviewed. Spending years on country-by-country expansion might have succeeded, but it would have also left Stripe vulnerable to local, nimbler startups and given deep-pocketed rivals like PayPal or Adyen more time to execute their own plans.
With Stripe Atlas, the firm has solved this time dilemma by executing a reverse-Netflix. That is, instead of carrying its service to users worldwide, it’s carrying those users to the service. After it completes private beta and works out any remaining kinks, there will be no barrier to entry for any entrepreneur wanting to get signed up on Stripe. In fact, Stripe can now claim to offer the best incentive in the industry to potential users. Easier access to VC money from America.
Follow the yellow brick road
Only a handful of US-based VC firms, led by 500 Startups and Sequoia, have a regional presence in Asia. For most startups with global ambitions, there will come a time when they want access to US investors. Prior to Stripe Atlas, that was a tough sell.
For all the growth Asia has seen in venture capital over the past few years, examples of companies earning investment from US firms are few and far between. HodgenLaw gives a good summary of the concerns:
“Understanding how to [earn money investing] is difficult even when you are living in California and investing in a startup in California. So imagine what happens when you add variables to the investment decision…You (the VC) don’t intuitively understand the corporate laws of the other country so you don’t know exactly what you’re buying into when you get shares of a foreign corporation… More expense, more delay, more uncertainty.”
Those concerns can now be mitigated, and Asian investors are poised to win too. “I do not expect for this program to make it any harder for Asian VCs to invest in the local ecosystem. If anything, this will improve the global viability of their companies, especially those looking to expand into the US market,” notes Justin Hall, venture partner at Golden Gate Ventures, another launch partner.
The funding angle is being overlooked, but I anticipate it becoming the top reason why startups choose Stripe. Doubtful? Y Combinator, which has been talking for nearly a year about the need to increase the number of Asia-based startups in its program, has already embraced Stripe Atlas, offering access to all international YC Fellowship companies.
The effects – both the costs and the benefits – of Stripe Atlas won’t be visible instantly. And competitors, large and small, will react and improve their own services. Whatever they do, they ought to take a lesson from this initiative: Don’t bother adjusting yourself to reality when you can adjust reality itself.