The news on Friday (Nov. 25) that Stripe had raised $150 million of new funding on a company valuation of $9 billion has been seen by many as a validation that this is a company at the top of the fintech game.
Stripe was reportedly valued at $5 billion during its last round of funding last July.
“The valuation is very high relative to other, similarly tenured payments companies like Square and Adyen, indicating that Stripe is truly the top performing company that most believe it to be,” said Rick Oglesby, principal of AZ Payments Group and a partner of Double Diamond Group. “Doubling its valuation in 18 months indicates very strong growth in transaction volume and customer acquisition.”
“That’s not surprising though,” Oglesby continued. “Stripe plays strongly in the space of well-funded e-commerce startups, which by nature focus on the biggest emerging opportunities they can find. By capturing the payments volume of the fastest growing companies Stripe is riding a very big, fast-moving wave.”
Adam T. Hark, Managing Director at Preston Todd Advisors, agrees. Specifically comparing Stripe to Square, he argues that Stripe has significantly greater potential.
“Stripe focuses on internet-based merchants, which has been an area of growth in the acquiring space for a few years now, and will continue to be in the future,” Hark said. “Stripe’s sales channel is stronger and more valuable, as it targets software developers who create robust online platforms for e-commerce shops.”
“These wholesale end-to-end solutions create greater value than just payments processing, and generate higher revenue as they command a higher price point with the additional value they present to the end-user/merchant. Adding up Stripe’s target merchants, sales channel, and technology solutions, it’s reasonable to prognosticate that it has greater earnings potential,” he said.
Stripe plans to use its new funding to power aggressive growth plans next year, according to a company spokesperson.
Among its plans are quicker global expansion that will include new hiring and entry into new countries, adding depth to its software offerings to help its merchants run their businesses, and expanding its developer tools – including making acquisitions if the opportunity arises – the spokesperson said.
According to Oglesby, this news indicates that “Stripe is doing a great job of servicing its target market. It targets the fastest moving companies anywhere, and it’s able to keep up with those companies and service their needs. That in itself is an impressive accomplishment. The fundraising also indicates that the company is getting ready for something pretty big that could even accelerate historical growth.”