Startup Life/Opinion/

Could a Stripe today succeed without Silicon Valley?

Stripe, founded by Irish brothers the Collisons, is an American success story with European roots. But is its path replicable?

Nicolas Colin

By Nicolas Colin

Nicolas Colin is cofounder of VC firm The Family. He writes a regular column for Sifted

The payment company Stripe recently announced a $600m Series H fundraising at an impressive $95bn valuation.

Among all the chatter it has triggered in the tech world, there’s been a specific discussion about Stripe being more connected to Europe than the average Silicon Valley tech company. After all, it was launched in 2010 by two European founders — brothers Patrick and John Collison. It has long affirmed its European roots and identity. And now, with its latest round, it will invest in its European operations and increase its presence in the Collisons’ native country of Ireland.

One question being bandied about is the following: could a European startup reach the same level of scale and success today without making the ‘detour’ through Silicon Valley that Stripe did?

A short history lesson

Let’s start by setting the record straight: Stripe owes a whole lot to the US. In fact, the Collisons’ relationship with the US started even before they launched Stripe. Both brothers attended prestigious American universities, which got them closer to Silicon Valley and exposed them to an American mindset early on.

When the Collisons set out to launch Stripe, they joined the renowned accelerator Y Combinator, where they became favourites of founder Paul Graham. Y Combinator was already at the top of its game, having invested in startups such as Reddit, Dropbox, and Airbnb, as well as having perfected its reverse engineering of how tiny startups can turn into great tech companies. Graham has said many times that in his eyes the Collisons are unique, their company owing much of its success to them as individuals. But it’s also true that they benefited a great deal from Y Combinator’s support, guidance and connections.

“There are physical places, and San Francisco is chief among them, where software-related information moves faster, and multiple feedback loops give those who are there an unfair advantage when it comes to developing software.”

There was another great advantage to Stripe being based in San Francisco, the beating heart of the global community of software developers. You might have the impression that software people are scattered around the world, each at home behind their computer and interacting solely via tools such as GitHub and Stack Overflow. But there are physical places, and San Francisco is chief among them, where software-related information moves faster, and multiple feedback loops give those who are there an unfair advantage when it comes to developing software. Indeed, if you need to hire the best software people to build a product that’s targeted at other software people, it’s an excellent idea to be based in San Francisco (at least, it was before the pandemic completely changed the rules of the game).

Things didn’t stop there, either. Out of personal interest, but also to Stripe’s great advantage, the Collisons have built a strong relationship with a very influential segment of America’s intellectual vanguard. From Patrick Collison’s legendary interview of economist and mega blogger Tyler Cowen, to Stripe Press (the company’s publishing arm) promoting now influential authors such as Martin Gurri and Nadia Eghbal, Stripe has positioned itself at the centre of the US’s conversation about the future.

Finally, this is all without mentioning the capital that Stripe has raised from US-based investors along the way, starting from its 2010 seed round led by Sequoia Capital to more recent rounds involving the likes of General Catalyst, Tiger Global Management, and Andreessen Horowitz.

“Stripe’s founders are European, but theirs is very much so an American success story.”

In short: sure, Stripe’s founders are European, but theirs is very much so an American success story.

Beyond the US

And yet, to Stripe’s credit, it hasn’t rested on its hard-earned American laurels. The company has invested a lot in looking outward: by increasing its presence in various other regions of the world (from Dublin to Singapore); by getting a strong foothold in Africa (where they recently acquired Nigeria’s Paystack for $200m) and the Middle East; and by being a pioneer in remote work (one of its five engineering hubs has been fully remote since 2019).

In other words, right when the world is fragmenting at an accelerated pace and some US companies are retreating into their domestic market, Stripe has elected to play on its strength: its European outlook. This has made it more aware of the rest of the world and more able to deal with cultural diversity.

“Stripe has invested a lot in looking outward.”

It’s as if they have managed to get the best of both worlds: all the resources and connections that can only be found in Silicon Valley, while also moving across the world to secure growth and goodwill in many other cultural, linguistic and business contexts — a challenge which Europeans are more apt to recognise and be willing to tackle.

Which leads us back to the initial question: could the equivalent of Stripe make it today without the American detour?

I still find it difficult to think that you can emulate the Collisons without everything they were able to harvest from their San Francisco base. But it’s also true, as recently pointed out by On Deck’s Andreas Klinger, that in the era of remote work and the ability to access resources from afar (whether it’s capital, advice or talent), going to Silicon Valley doesn’t seem to be a requirement for a startup such as Stripe to be able to scale. Andreas offers Hopin (in which he’s an investor) as a contemporary example. Now we’ll see if Hopin lives up to expectations, and if many other European startups follow in its footsteps.

Nicolas Colin works for investor The Family. He writes a regular column for Sifted.

*The Family has been an investor in Stripe since 2014.