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Patrick and John Collison of Stripe.
SWIPE UP

Stripe’s soaring valuation shows money is still pouring into tech unicorns

John Detrixhe
By John Detrixhe

Future of finance reporter

From our Obsession

Future of finance

New technology is upending everything in finance.

Stripe, a Silicon Valley payment company, has leapt into the big leagues of valuations among private tech companies. Along the way, its meteoric rise has left many other payment and financial companies in the dust.

Stripe said today that it raised $250 million in funding that values the payment company at a whopping $35 billion. General Catalyst, Sequoia, and Andreessen Horowitz were among the firms that invested in in the payment company, which was founded in 2010. Its latest valuation is 75% higher than when it raised money in Sept. 26, 2018.

In its earlier days, Stripe was seen as a payment system that focused on startups and developers, but its client list now includes the likes of Amazon, Uber, and Deliveroo. The company says it operates in 34 countries and plans to expand into six more in the coming months. It recently announced Stripe Capital, a lending service, and a corporate card for businesses.

To say that payment company valuations are perky is an understatement. Mastercard, PayPal, and Visa have all seen double-digit increases over the past year. But Stripe’s jump in valuation takes it to another level. WeWork’s delayed IPO doesn’t seem to have provoked much soul-searching among venture capitalists, at least when it comes to this particular Silicon Valley fintech darling.

Investors are betting big on payment companies as more transactions take place digitally. Fewer people pay with cash in the offline world, and shopping and transactions continue to migrate online. John Collison, president and co-founder of Stripe, said in a statement that less than 8% of commerce takes place online today, suggesting vast scope for further growth in internet and digital transactions. “We’re investing now to build the infrastructure that’ll power internet commerce in 2030—and beyond,” he said.

Other research suggests that some of the powerful tailwinds behind digital payments could be tapering somewhat. The $33 trillion consumer payment market is already 44% penetrated by cards, according to Bernstein. (The data excludes China, where Alipay and WeChat Pay reign, and much foreign competition is locked out.) Bernstein’s analysts estimate that this purchase volume will have a compound annual growth rate of 9% over the next five years, down from 10% between 2013 and 2018.

Even so, the analysts, led by Harshita Rawat, noted that opportunities for payments in e-commerce remain “under-appreciated in our view, especially as new categories of spend continue to move online.”

This story has been corrected in the third paragraph to show the correct number of countries Stripe is expanding into.

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