With additional reporting by Alex Konrad.
Investors are valuing Stripe at a $115 billion valuation in “secondary market” transactions, where shares of a private company’s stock are sold after they were first issued. That valuation is up more than threefold from the $36 billion Stripe fetched when it raised money in April 2020 from venture firms including Andreessen Horowitz, General Catalyst and Sequoia.
Stripe is also planning a new primary funding round at a valuation north of $100 billion, according to a person familiar with the matter. A spokesperson from Stripe declined to comment.
The San Francisco company was founded by Irish brothers Patrick and John Collison in 2010. It helps businesses small and large—including Peloton and Canadian ecommerce platform Shopify—accept online payments, taking a fee on every transaction. While Covid has accelerated consumers’ shift to online shopping, Stripe and its peers have seen demand for its services swell.
Netherlands-based Adyen is Stripe’s closest competitor and counts Netflix as a customer. It has seen its stock jump 150% over the past year, reaching $66 billion. PayPal’s stock has risen just as much, and it competes with Stripe through its Braintree payment processing service that it bought in 2013. Stripe’s business is likely a similar size as Adyen’s and Braintree’s, estimates Lisa Ellis, a partner and senior analyst at investment research firm MoffettNathanson. But Stripe is likely growing faster, and its partnerships with Shopify and Amazon give it a competitive advantage, she says.
Together, Adyen, PayPal and Stripe make up 10% of all payment processing globally, says Ellis. Yet they’re small compared with the older, more mature processing businesses like Florida-based FIS, Wisconsin-based Fiserv, Atlanta’s Global Payments and JPMorgan Chase, which have a combined 40% market share. (The remaining 50% of global transactions are processed by local companies and regional banks.)
Ellis estimates that Stripe processed $200 – $250 billion in transactions in 2019 and grew roughly 50% in 2020. What does she think of a $115 billion valuation for Stripe? “It’s nuts in the same way that all private valuations are nuts right now for anything in fintech,” she says. But given their competitive position, “it’s not utterly insane.”
Over the past 12 months, fintech valuations have ballooned, with companies like Robinhood, renters and homeowners’ insurer Lemonade, buy-now-pay-later company Affirm and online bill payment platform Bill.com seeing their values rise threefold or more. More than a half-dozen have gone public or are in the late stages of doing so. Stripe is among the many fintech companies rumored to be going public sometime in 2021.