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Billion Dollar Unicorns: Stripe Exploring Tie-Ups for Growth

Posted on Thursday, Mar 12th 2015

A Forrester research estimates the mobile payment market to grow to $90 billion in total spending in the US alone by the year 2017. One player making big waves in the market is Billion Dollar Unicorn club member Stripe.

Stripe’s Offerings

San Francisco-based Stripe was founded in 2009 by brothers John and Patrick Collison who had earlier set up online auction management firm Auctomatic. The two wanted to create an online platform that would simplify the process of accepting payments for websites and apps. Their platform allows companies of all sizes to set up credit-card processing capabilities on their digital pages with a simple code. Developers can simply embed their code into their products and begin to transact in over 139 currencies, bank transfers, and even bitcoin in less than five minutes. The code has been deployed by several upcoming Internet players such as Lyft, Shopify, and Postmate.

The company has managed to expand their market share tremendously through several tie-ups. Last year, they entered into an agreement with social media sites including Twitter and Facebook that allows users to buy goods and services directly from these networks. Through their button, users don’t have to be directed to the retailer’s website. While Twitter is a big media for Stripe, it is still a very nascent one as Twitter themselves are still experimenting with the idea of e-commerce through Tweets.

They are also helping with international expansion for other retailers. They have signed up with Alibaba’s payment service Alipay that allows Chinese users to buy goods directly from US retailers. In 2014, they were also selected by Apple to partner with Apple Pay services. The tie-up with Apple will surely skyrocket Stripe’s mobile payment volumes.

Stripe’s Financials

Stripe earns revenues by charging a fee of 2.9% of the transaction value plus a commission of $0.30 per transaction. Stripe does not disclose both their user and financial metrics. Analysts estimate that they had processed $1.5 billion in transactions in 2013. That translates to revenues of at least $43.5 million based on their transaction fee percentage alone.

Stripe is venture funded so far and has raised $190 million from investors including Thrive Capital, Khosla Ventures, Founders Fund, General Catalyst Partners, Sequoia Capital, Allen & Company, Y Combinator, SV Angel, Aaron Levie, Chris Dixon, Elad Gil, Peter Thiel, Elon Musk, and Andreessen Horowitz. Their last round of funding was held in December 2014, when they raised $70 million at a valuation of $3.5 billion. Their valuation has skyrocketed since January 2014 when they raised $80 million at a $1.75 billion valuation. Stripe plans to use the new funds toward international expansion. They do not plan to go public soon.

They still have a long way to go though. Market giant PayPal, for instance, operates in more than 190 countries compared with Stripe’s 12. PayPal also ended 2014 with $7.9 billion in revenues and an estimated valuation of $50 billion.

More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.

This segment is a part in the series : Billion Dollar Unicorns


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