Stars and Stripes: The $95 billion Valuation​

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By Curtley Bale​


The Story

Online payment company Stripe has become Silicon Valley’s largest private company. This comes after a fresh round of fundraising has left Stripe with a valuation of $95 billion. This means the company surpasses Elon Musk’s SpaceX which previously held the title ($74 billion - CNBC). The new valuation reflects the boom in online sales during the past year, arguably making Stripe a ‘winner’ of the pandemic.

What It Means For Businesses And Law Firms

Stripe was founded in California in 2010 by the Collison brothers, originally from Limerick, Ireland. The business focuses on online and digital payments, acting as the middle man in transactions between businesses and consumers. Stripe makes money by taking a cut of the transaction value (1.4% in Europe, 2.9% in the rest of the world) before processing the transaction (Stripe). The attraction of Stripe is the ease and speed of transaction, saving the business from getting its own licence, or dealing with card providers directly. Early investors in Stripe included PayPal founders Elon Musk and Peter Thiel. The business is now present in over 42 countries worldwide.

The recent fundraising round raised $600 million, with investors such as Sequoia Capital, Allianz and the Irish National Treasury (BBC). The funding is expected to facilitate expansion into Europe including the hiring of 1,000 staff at its joint HQ in Dublin. Stripe expects to open operational centres in India, Brazil and Indonesia to increase its ability to facilitate transactions around the globe. The private company already boasts some stellar names as clients, including Deliveroo, Uber, Shopify and Instagram.

Stripe’s valuation has tripled within the past year. As such, it has gained 200,000 new customers in Europe alone since March 2020. One of the Collison brothers said this has led to Stripe processing a whopping 5,000 payments per minute (Financial Times). The recent success has led to Stripe being valued at $95 billion, more than Facebook ($83.5 billion - Fortune) and Uber ($72 billion – NY Times) before their respective IPOs. This huge valuation has led to commentators speculating about when Stripe will undertake its own roadshow and public offering. These rumours have been stoked even further by the appointment of high-profile board members such as Mark Carney (former Governor of the Bank of England and current Climate Change Envoy to the UN), Aon’s CFO and a new CFO from General Motors (Financial Times). Despite much speculation, there is no confirmation as to when, or indeed if, Stripe will go public.

Despite operating in a tight market, Stripe is very efficient, with only 3,000 staff members. The business is set to consolidate its position in America as well as Europe, where it has multiple competitors in a fragmented market. Competition such as WorldPay, PayPal and Ayden are all seeking a slice of this increasingly lucrative market, meaning Stripe will have to continue to differentiate itself from the rest.

Image Credit: Michael Vi / Shutterstock.com
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