Stripe`s VC activities

Efi Pylarinou is the founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer – No.3 influencer in the finance sector by Refinitiv Global Social Media 2019

Stripe is in the spotlight this season. They ranked high based on several criteria in the latest Forrester Wave report (along with the European Adyen).

The rankings are based on 15 criteria and 5 is the top score. Most of the other competitors are already public companies, 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.

Stripe`s latest valuation is $36billion and lots of Seeking Alpha authors discuss about whether it makes sense at this 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 21 investments in total and 4 of them are diversity focused. Fifteen out of the 21 investments were done after 2017. As early as 2014 they participated in the $3m funding of the Stellar Development foundation.

Most of you maybe 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 one easy integration for merchants. Stripe has also invested in their seed round too.

In 2020, Stripe has invested in 5 startups (including Paymongo). In three of them, Stripe was the lead which maybe qualifies 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. Series was  $100million.

Another early-stage lead investment (Series A) is Step, a US venture developing 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. When I look at the investments that Square has, I see virtually none in which Square is a lead investor.

Square has 12 investment holdings versus 21 in Stripe`s portfolio. Stripe`s portfolio is much more concentrated around payment networks.

Square`s holdings are much broader and include, wellness hardware (Oura), video streaming (Bitmovin). Square, on the other hand, has done 17 acquisitions and Stripe has done 8.

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