Paris-based fintech startup Lago has secured a $15m Series A round funding, aiming to challenge payments giant Stripe with an open-source billing system for businesses. The capital raise brings the total funding for the firm to $22m. Several US investors participated in the venture, which was led by New York-based VC FirstMark. This includes SignalFire, Script Addition, and Y Combinator (YC), along with high-profile open-source community advocates such as Meghan Gill from MongoDB and Clément Delangue, CEO of Hugging Face.
Founders Anh-Tho Chuong and Raffi Sarkissian, both former employees of French unicorn Qonto, set up Lago to help businesses navigate complex billing processes. Various billing strategies are used by companies to monetize products and services, including monthly subscriptions, commission-based transactions, upfront payment, metering, or pay-as-you-go. Lago enables its customers to build a flexible billing system compatible with their specific business model which in turn improves their monetisation strategy’s efficiency.
Lago believes the current market solutions, including Stripe, are not equipped to handle the complexities of many business models. Chuong highlights that “Stripe was mostly made for B2C and pure subscription models,” while Lago focuses on solving issues prevalent in hybrid pricing models.
The startup offers an open-source infrastructure for billing, allowing users free access to the platform’s source code. This empowers developers to utilise Lago’s building blocks to create a customised billing system suiting more intricate monetisation strategies. Examples could include a telecom operator requiring to account for a customer’s monthly internet and phone subscriptions, out-of-plan calls and texts, or specific extra chosen options.
Lago currently serves around 100 customers from various sectors, including AI startups Mistral and Together, and fintechs Swan and Juni. Chuong explains that their choice of open source was necessary for providing flexibility needed by many businesses. It also allows customers insight into their billing system’s source code, a proposition attractive due to the service’s critical nature.
This positions Lago in contrast to competitors like Stripe, whose platform code is restricted from developers. Chuong points out that Stripe’s exclusive compatibility with its payment system is restrictive, while Lago allows its users to connect their billing architecture with any payment processing platform.
As an open-source platform, Lago’s core product is free, but the startup gains its revenue through premium services like system support & maintenance, business-specific functionalities, and integrations. Chuong asserts, “billing is so mission-critical” that most users opt for the most premium features, ready support, and the latest functionalities.
The fresh cash injection will empower Lago to augment its R&D operations and expand the platform’s service offerings. The startup’s product and technical team, currently comprising 12 members, is expected to double in the coming year. Lago’s expansion plans also involve opening an office in New York in the coming months, aiming to increase its footprint in the US market where currently 30% of its customers are based.
Source: The open source billing startup that wants to take on Stripe }}.
