Many businesses are having a difficult year, but one company that is thriving even during the coronavirus pandemic is Stripe. Its valuation has likely quadrupled in less than two years.
News that the fintech is in talks to raise a new funding round that would value it at as much as $100 billion (€83.6 billion) shows just how much investor appetite there is for the company founded by Irish brothers Patrick and John Collison a decade ago.
The company’s valuation has risen from $22.5 billion in early 2019 and was estimated at $36 billion as recently as seven months ago, after it raised a further $600 million to bring total investment to date to $1.3 billion.
So what gives? How can its valuation have soared so spectacularly? Well, the fact that its easy-to-use technology helps businesses process billions of dollars in transactions is obviously a factor. With ecommerce thriving as more of us limit our movements during the pandemic, Stripe has been a key beneficiary.
“People who never dreamt of using the internet to see the doctor or buy groceries are now doing so out of necessity. And businesses that deferred moving online or had no reason to operate online have made the leap practically overnight,” said John Collison earlier this year.
Stripe has seen a significant increase in business since the start of 2020, with video conferencing group Zoom, Just Eat, toymaker Mattel and media group NBC among its new clients. These are all household names, highlighting how the company has progressed from mostly serving start-ups to winning over the big players.
New research commissioned by Stripe and conducted by Forrester shows plenty more opportunity. The study shows European retailers’ appetite for growth has increased during the pandemic, with many of them keen to increase revenue and profit from mobile channels and to improve cross-border payment capabilities, two areas in which the company excels.
And, as the Collison brothers have said repeatedly, they are only just getting started given that less than 10 per cent of global commerce currently takes place online.
This explains Stripe’s interest in backing start-ups in regions where ecommerce is still largely in its infancy. The company last month acquired Nigerian company Paystack for more than $200 million and also recently led a $12 million round for Manila-based PayMongo.
For Stripe, the future looks bright no matter which way they look.