Stripe, the fast growing mega payment company has said that it will take its mission to “to increase the GDP of the internet” and build the “economic infrastructure” of the online world to the next level as it plans to be a $100 billion fund for small businesses. Established by two brothers, Patrick and John Collison and today a company with millions of global users, more than 40 of whom do $1 billion-plus a year in transactions using the Stripe platform.
The brothers became two of the world’s most successful entrepreneurs by starting a payments company aimed at pleasing developers—the coding carpenters of the internet’s landscape. Stripe was a hit with startups, soothing as it did the headaches that come with getting paid over the internet. Since then, the company’s pitch has evolved to include multiple services that make it more of a one-stop-shop for running a business. Customers can use Stripe’s credit card fraud detection service, or its Atlas product to form a company in Delaware. This month, Stripe launched its Treasury product in partnership with the likes of Goldman Sachs; platform companies like Shopify, an e-commerce firm, can use it to offer bank accounts to their merchants.
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Meanwhile, the Collison brothers are climbing the Forbes list of global billionaires, which currently ranks them around No. 900, worth $3.2 billion each. That accounting may soon be out of date. In a new funding round under discussion, Bloomberg reported Stripe could be valued as high as $100 billion, about triple its valuation in April. Covid-19 body-slammed most of the global economy, but not Stripe. Lockdowns and social distancing accelerated the shift from cash to digital payments, according to just about everyone, and that benefits companies like Stripe. During the first half of the year, US online retail spending hit $347 billion, according to McKinsey (pdf), a 30% jump from the same period in 2019.
Investors, meanwhile, are rabid for firms that can grow in the online economy, and the US market for tech IPOs has taken off accordingly. Hedge funds and sovereign-wealth funds are scrambling to get in on the action by buying shares in private companies, like Stripe, before they go public: Bids for pre-IPO shares of Stripe in the secondary market have skyrocketed, according to Liquid Stock data.
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Bids for pre-IPO shares of Stripe in the secondary market have skyrocketed, according to Liquid Stock data. Stripe execs don’t appear to be in any rush to file IPO paperwork. But the hiring this summer of CFO Dhivya Suryadevara, formerly of General Motors, was fodder for speculation that a listing could come sooner than the Collison brothers are letting on. Stripe doesn’t comment on why Stripe doesn’t accept PayPal, one of the world’s most-downloaded payment apps and a key pioneer of internet commerce. But it seems obvious: The companies are rivals, and, as Patrick’s conversation with Thiel shows, the brothers have targeted the 22-year-old PayPal since their operation’s early days.
One of Stripe’s main competitors is Braintree, which PayPal bought for $800 million in 2013 when PayPal was still part of eBay. The deal included Venmo, an acquisition that gave PayPal a fast-growing mobile-payments service that’s popular with the millennial set. But Braintree’s payment platform was also a gem—it provided transaction plumbing for the latest generation of internet companies like TaskRabbit and OpenTable. Fast forward to 2020 and those companies are counted as customers on Stripe’s website.
Adyen is another big rival. The Dutch payment company was founded in 2006, and its market capitalization of nearly $70 billion—up from $8 billion during after its IPO in 2018—puts it among Europe’s most valuable tech companies. Valuations for Stripe and Adyen have tended to hover in the same territory, and they are increasingly going head-to-head for customers with major global operations. When it comes to merchant payments, Stripe and Adyen “lead the pack,” according to a report in September by Forrester. The research firm gave Stripe a slight edge when it comes to current offerings and strategy.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry