The Start Tank first launched in the US to then make its way over to the UK in October 2014. The programme runs for six months and provides promising startups with a co-working space at the London office of mobile-centric subsidiary Braintree on Tottenham Court Road, where they are mentored and have access to investors, advisors and other assorted contacts.
It also comes complete with the benefit of Startup Blueprint, which grants 18 months worth of free transactions of up to $1.5m via PayPal and up to $100,000 via Braintree which joined PayPal as part of an $800m takeover in 2013.
Five companies graduated from the programme in March 2015 and PayPal wasted no time in launching a second Start Tank in April, which came to a close in October. This time around, six companies were on the programme, a couple of which had already been part of the first cycle, so they can’t reapply for a third term.
Henchman is a fine example of a Start Tank graduate that scaled significantly across the 12 months with the Start Tank.
The business, which provides one-hour delivery on any item from McDonald’s to a football strip across London, started with just the three co-founders and now boasts almost tenfold the number of staff.
“We say we can deliver anything, and we look forward to our customers putting that challenge to the test. My favourite deliveries so far include a fridge, which we delivered within 60 minutes of the order coming in, cinema popcorn to people holding a movie night with friends at home, and more than a few hangover cures in the shape of beroccas, lemsips and chicken soups,” said co-founder and CEO Ryan Perera.
“We even had someone use Henchman this summer whilst sitting in a restaurant in the City the sun was shining in his eyes and there wasnt another table available, so he ordered a pair of Ray Bans that we delivered to his hands before his second pint.
But what’s in it for PayPal Company shares A slice of the profits Not so, according to global director of startups, accelerators and VCs at PayPal, Corrado Tomassoni.
His role sees him jetting across various PayPal locations in Europe, Asia and the US to coordinate the startup initiatives for PayPal and Braintree like the Start Tank and Blueprint.
“We’re not investing in them, taking equity or intellectual property for products. We’re basically giving back to the local community. PayPal and Braintree have been startups and we’re keen to look at the ecosystem locally in the UK and Europe,” Tomassoni explained.
“We want to help startups based on the possibility for us to give value to the businesses to develop more and create business opportunities. Hosting them in downtown London is a great opportunity and we’ve seen many of them that are already successful.
“We don’t have any corporate ventures internally in PayPal or eBay, so we’re not investing in a way like Google Ventures. We don’t have any specific goal in that direction with the programme.
Google Ventures, for example, led a $60m investment in discount luxury travel site Secret Escapes in the summer alongside VC firm Octopus.
He emphasised that the point of the Start Tank is to provide business and technical support to those on the programmes. Candidates are selected after a series of surveys to determine the areas where support is most required, whether that’s legal, software development or otherwise, and leaders are allocated accordingly.
Stressing that there is no hidden monetisation method, Tomassoni revealed another reason PayPal is so keen to foster the startups is actually in a bid to improve its own operation. There’s also a desire to generate relationships early on should the companies go on to become the next big thing.
There’s no moneymaking. We’d love to stay close to the promising startups because maybe they’ll be new triumphs of the future with new business or monetisation models,” he said.
Our product proposition is focused on payments across verticals. Being able to talk with businesses who can express their needs of the future is a good feedback opportunity to look back at products to see if they adapt to the external ecosystem. We’re giving back and staying close to what’s next.
Continue reading on the next page for why the American firm is so interested in London and the UK, and why the aim is to keep the Start Tank small.