The automatic payment app that has generated the largest seed funding round in Silicon Valley history remains largely a mystery, but technology insiders insist this is not a sign of an expanding bubble.
21-year-old Lucas Duplan grabbed headlines last week when his company, Clinkle, received $25 million to develop a new method to make easy payments using your smartphone. Such a sum for a young developer with no track record and a business that has never generated a cent took the technology world by surprise.
But with heavy hitters like Andreessen Horowitz, Peter Thiel, Accel Partners' Jim Breyer, former Facebook COO Owen Van Natta and Salesforce's Marc Benioff putting up the money, few are suggesting this is just a whimsy by venture capitalists with too much access to easy credit.
"I've not seen the technology but for all those big firms to be involved, there is definitely something there," said Rich Moran, of Accretive Solutions and Irish Technology Capital.
“They’re not doing this unless they see something there. Believe it or not, venture firms really do go through due diligence and the people who are involved here; they are the stamp of validity. There are so many smart guys in there who know this industry inside out.”
Despite the success of systems like Square and Paypal, Silicon Valley has been eager to find the next generation of software in the payment sector. It is seen as the most likely sector to spawn the next giant corporation.
Duplan was relatively unknown before the funding was announced. Since then he has become a minor star in the tech magazines in the US. What is known about him is that he completed a four-year computer science degree at Stanford in three years and spent much of that time developing Clinkle's software. He is using the college campus as the practice space for his business, setting up Clinkle's technology in the university's shops and restaurants.
Successful model
In doing so he is copying the successful model used by Marc Zuckerberg when creating Facebook. "Instead of trying to boil the ocean, we decided to start with college campuses," he said in a recent interview.
Duplan has outlined the advantages of Clinkle over the other apps in the same space. He believes his idea replaces the need to carry cash or a credit card and it removes any difficulty for retailers because it can be joined to their point of sale in minutes and requires no hardware.
His expectations are high. Duplan believes Clinkle will mirror email in that it will make people wonder how they ever used cash and credit cards in the same way we now wonder how we ever coped with paper and snail mail.
In the meantime, many investors in Silicon Valley are looking to find their own technology that will remove the wallets from our pockets. Founder of the Irish Technology Leadership Group John Hartnett said: "The payments space is red-hot right now, with companies like Stripe, Jumio, Flint Mobile getting huge valuations and there is certainly the flavor of "B" but is it boom or bubble?"
The ITLG has been active in this sector with payments firms taking awards at the group’s summit last May and Mr Hartnett said he is leading a multi-million dollar investment in the same space.
With $25 million and the backing of some of Silicon Valley’s leading entrepreneurs, Duplan has an advantage over many of his competitors. But with the software still in the trial stage it may be some time before Clinkle replaces the cash and credit cards in your wallet.
