The average preferred stock seed funding round in the US is $1,360,000. Andreessen Horowitz, Accel Partners, Intel, Intuit, Peter Thiel, Diane Greene, Jim Breyer, Marc Benioff, Owen Van Natta, Mendel Rosenblum, Ross Perot Jr., and more bestowed $25MM on Clinkle, a super-hyped Stanford-bred startup with a college beta test under its belt. Clinkle just raised the largest seed round in Silicon Valley history. Some will chuckle at the raise and make immediate comparisons to Color, but the one thing this investor group smartly realizes is that the mobile payments war is not going to be won by a small, scantly-funded startup making the likes of PayPal, Square, Apple, and Google sweat. The mobile payments war is going to be won by a company with a war chest. $25MM qualifies.
Just as VCs picked their horses in the LBS space (Foursquare, Gowalla, SCVNGR, Loopt, Whhrl, Where) and the public transportation space (Uber, Hailo, Lyft, SideCar), mobile payments has finally come into focus. The current players, in one way or another, are:
LevelUp – Google Ventures, T-Ventures, Highland, Balderton, Transmedia, Deutsche Telecom
Lemon Wallet – DFJ, Maveron, Lightspeed, Social+Capital Partnership
Square – Citi Ventures, Crunchfund, Starbucks, Branson, Kleiner Perkins, Visa, Sequoia, Rizvi Traverse, Khosla, First Round, Angels
PayPal – Self-Funded
Google – Self-Funded
ISIS – AT&T, Verizon, T-Mobile
Clinkle – Accel, A16Z, Intel, Intuit, Angels
MCX – Merchant-funded
Apple, Facebook, Amazon (potential entrants) – Self-Funded
The space is still in its early days, and as Google Wallet, PayPal, ISIS, and MCX have proven, there is no slam dunk win. When news of Clinkle’s funding surfaced, I decided to try to wrap my head around what features might be included in Clinkle’s app.
Rumored Features in the App
1. Send money to any person, on any phone, at no cost (Venmo functionality)
2. View store menus on your phone and skip the line by pre-ordering (OLO functionality)
3. Pay with your phone using a credit card funding source at stores, gain loyalty points, and unlock deals at your favorite places (LevelUp functionality)
4. “Clinkle Cash,” a separate bank inside the app (PayPal functionality)
Do One Thing, and Do It Well
Clinkle comes to the mobile payments table with amazing advisers, a growing team of developers bred in Stanford’s computer labs, and a sizable chunk of change in the bank. In the Jim Collins book Good to Great, he encourages businesses to ‘do one thing, and do it well.’ In his well-documented Hedgehog Concept, the fox keeps launching new ideas to kill the hedgehog, but the hedgehog evades him by doing one effective move…rolling into a thorny ball. It seems like Clinkle might be attempting to be everything to everyone in the mobile payments space, and therein could spell its downfall or rapid adoption. Are smartphone users looking for simple, easy payment, or are they looking to use one app for everything currency-related? Will Clinkle be able to execute on all these ideas at once? Only time will tell.
Growing Payments Networks
The difference between growing a social network on a college campus and growing a payments product on-campus are the layers of infrastructure inherent in payment systems, software, and hardware. Mobile payments players are swimming in a sea of entrenched payment processors, POS companies, issuers, hardware manufacturers, and more. Unless you find channel partners, merchants acquisition is 1-by-1. There are hundreds of POS systems sitting on local merchant counters, and integration is both costly and time-consuming. The rumored ‘Aerolink’ concept and their partnership with Verifone may be step 1.
At this point, there are more questions than answers with Clinkle, and we await their official launch to learn more. The recent funding shines a bright light on startups in the space, but also pressure to perform quickly.