PayPal is to launch an accelerator programme for technology startup companies.
Start Tank UK will be situated in London and is the third accelerator under the name, following US programmes in Boston and Massachusetts.
The accelerator will select up to five technology startups from the UK and host them in the London offices for six months.
Startups will have access to mentors and PayPal executives as well as executives from Braintree, the payments company acquired by PayPal last year. The companies will connect with external advisors who will give advice on profit and growth, as well as angel investors and venture capitalists.
PayPal and Braintree will waive payment processing fees for the startups using their platforms. After six months, the companies will present their business models at a demonstration day.
Nurturing small business
In a blog post PayPal pointed out it had no intention of taking equity in the businesses.
“The UK startup industry is a vibrant and exciting ecosystem, and we are committed to helping them continue to grow and succeed. Several of the startups that took part in Start Tank Boston have already graduated from the programme, and we look forward to emulating this success in the UK,” said John Lunn, who runs PayPal's Developer Network.
The online payment platform has said it will offer the cash advances to existing business customers and eBay sellers. PayPal will provide interest-free cash against the businesses’ future sales.
PayPal’s Start Tank UK is yet another programme led by financial services company situated in the capital.
But for startups the cost of setting up a business in London can be astronomical. Some companies even prefer the idea of basing themselves outside the capital to benefit from much lower costs.
Fintech clusters outside London
Andrea Leadsom MP, economic secretary to the Treasury, wants the finance technology (fintech) industry to spread across the UK to encourage economic recovery in London and elsewhere: “Don’t just think in London – think about the north, the west, the Midlands, the south-west.”
Antony Walker, CEO of TechUK, agreed. He said the thriving fintech sector must be an opportunity for all the UK, and not just London. “It’s entirely possible to build successful tech companies outside London,” he said, pointing to Edinburgh and Leeds as two existing clusters.
Leeds' cluster has its roots in the financial services market and could become a hub for fintech startups.
Due to its history of banking and credit agencies, fintech companies are already beginning to grow in this area.