Stripe has been aggressively investing in startups — 22 and growing
Stripe is in the spotlight as they ranked high based on several criteria in the latest Forrester Wave report (along with the European Adyen). They are also in talks to raise additional funding at nearly double the current valuation (current $36Billion, expected $70billion).
Stripe raised $600million recently (Apri 2020) and if a fresh round materializes at the talked about valuation level of $70billion, they would be the world’s second-most valuable venture-backed company. If ByteDance divests its majority stake in TikTok by this Friday’s CFIUS deadline, then Stripe would become number one at $70billion.
The Forrester rankings are based on 15 criteria and 5 is the top score. The criteria include the offerings of card payments or alternative online payments, subscription & recurring payment capabilities, currency mgt & settlement, fraud detection, APIs & architecture, 3rd party integration, and more.
Most of the other competitors are already public companies (e.g. Paypal, Adyen, JP Morgan, ACI worldwide, etc), while Stripe seems to hold off.
I personally expected (still expect) that they will come to the public markets via one of the SPAC structures that are mushrooming left and right in the US. Bill Ackman has publicly said that he held preliminary talks with Stripe but nothing promising has come out of this.
Lots of Seeking Alpha authors discuss whether it makes sense at the $36billion valuation to trade the shares on EquityZen, the pre-IPO investment platform.
While all eyes are on Stripe`s services, valuation, and its investors; not many talk about Stripe`s VC activities that are significant. Stripe has always been committed to funding early-stage startups. Stripe Atlas, its service in collaboration with Silver Valley Bank is in alignment with the goal of empowering entrepreneurs to get started.
Stripe`s investment activity started picking up after 2017. Stripe has invested in several startups and in a significant number they have been the lead investor in the Seed, Series A round. Crunchbase reports 22 investments in total and 4 of them are diversity-focused. Fifteen out of the 22 investments were done after 2017. As early as 2014 they participated in the $3m funding of the Stellar Development Foundation.
Most of you may be aware of Stripe`s latest investment in Paymongo, the Philippine payment processing fintech that raised $12million (Series A) with Stripe being the lead investor. Paymongo`s value proposition is focused on one easy integration for merchants. Stripe has also invested in their seed round too.
In 2020, Stripe has invested in 6 startups (including Paymongo). In four of them, Stripe was the lead which may qualify them to be considered as a VC player in Fintech.
Monzo has been in their investment portfolio since 2017 when they participated in the Series D funding of £71million. Stripe also took part in the June 2020 Series G capital raise of Monzo — £60million total.
Stripe`S 2020 investments include two earlier-stage tech companies: (a) Assembled is a US company focused on scaling digital customer support. Stripe was the lead seed investor; (b) Fast is the other US fintech investment and Stripe was again the Lead for its $20million Series A. Fast Checkout is the product for a one-click secure experience.
My `favorite` as it is disrupting student loans, adding value in upskilling is Stripe`s Lamda School investment. This is a coding school that people train now and pay later (sharing part of their future income when they get a job). Stripe participated in their 2018 Series A ($14million) and their recent $74million Series C.
Rapyd is another significant investment. Rapyd is a UK based Fintech as a service provider in the payment and API space. Stripe has participated in both their Series B and Series C rounds. Series B was $40million and Stripe was co-lead with General Catalyst (c.$100million).
Another early-stage lead investment (Series A) is Step, a US venture to develop a mobile banking app for teenagers.
Stripe`s investment activities in early-stage companies resemble more an early-stage VC style approach being the Lead investor in several of them.
Stripe is 10yrs old and continues to grow. The founders have been hiring Amazon and General Motors executives and are very much focused on maintaining an open architecture structure.
