Despite some calls to go public, Stripe has stayed the course by continuing to attract private money to fuel its impressive growth. As the following TechCrunch article reports, Stripe has racked up another successful funding round of almost $250 million.
“Payments startup Stripe has changed the landscape for how businesses can collect funds online by using a few lines of code, and today the company is announcing that it’s picked up more funding of its own. Stripe has raised $245 million, valuing the company at $20 billion. This is a big jump on its previous round, two years ago, that valued it at $9 billion.
The company says it plans to use the funding to hire more people for what it describes as its “distributed global engineering team.” It now has hubs in San Francisco, Seattle and Dublin (its co-founders, John and Patrick Collison, hail from Ireland), and it’s also going to launch a new hub in Singapore.
Engineering has been at the heart of the company’s growth from the start, up to now. Recall the famous essay by Paul Graham about Stripe that served as a mantra of sorts for how startups should grow. Fast forward to today, and Stripe boasts that “all told, the company deployed more than 3,200 new versions of its core API over the past year.”
The funding underscores the continuing strong climate for raising money from private backers at increasingly staggering valuations. VCs and private equity firms have raised billions, and they are looking for fast-growing, promising startups where they can invest that money. A number of startups are foregoing, or delaying, going public in favor of staying private for longer, financed by them.
“We have no plans to go public,” said John Collison in an interview. “We’re fortunate to be in the position that the Stripe business is performing very well and the long-term opportunity is that we’re very optimistic to providing the richer stack to businesses. Strong businesses do not always tend to be dependent on outside funding.””
Stripe has pursued an almost quiet, but effective strategy of targeting the high-growth segments of the economy: on-demand services, e-commerce, and mobile. Add to this their strength in handling cross-border and cross-currency payment transactions that speaks to the needs of their global clients. No doubt their expanding financial resources and technology platform positions them as a threat to other, more established financial competitors. The recent launch of their Stripe Terminal mobile POS device is another example of how Stripe continues to make inroads into new markets. This will be a key test for them as they come up against Square and First Data’s Clove. Payment industry players will be watching this very closely.
Overview by Raymond Pucci, Director, Credit Advisory Service at Mercator Advisory Group