Financial Services Market Heats Up As Stripe Valuation Doubles to $9 Billion

As first reported by the Wall Street Journal on Friday, 11/25/16, (and later on CNBC) Stripe, the online credit card processing company that has essentially become the go-to payment service for US startup companies raised an estimated $150 million in a new round of funding. This funding round values the company at $9.2 billion, including this cash infusion, nearly double the company’s valuation of $5 billion last year.

Stripe’s valuation is climbing at an inspiring rate, yet not all Fin-Tech start-ups are in such a good position. Square went public last year and so far its valuation has been flat. Some of that disappointing performance may be due to Square’s early adopters who are largely brick-and-mortar merchants that find Square’s smart-phone attachment very convenient. Stripe, in contrast, enables start-ups and others that are using e-commerce online. This online play may be a more attractive one from an investment perspective.

While Stripe hasn’t yet caught up to the volume of Square in customers or transactions, it is reportedly growing faster than the expected 40% growth rate of Square for 2016.

Stripe also reportedly has a significantly smaller workforce than Square — approximately 550 Stripe employees compared to more than 1,000 employees at Square.

The Wall Street Journal noted that the key investors of this new round were CapitalG, (Google / Alphabet investing firm), Sequoia Capital (a prior Stripe investor) and General Catalyst Partners (also a prior Stripe investor). Also secured by Stripe was a new line of credit from Goldman Sachs, Morgan Stanley, Barclays, and JP Morgan Chase.

In addition to the original Wall Street Journal article, other similar articles appeared at pymnts.com and cnbc.com.