Online payments start-up Stripe on Monday closed a $70m fundraising round that has seen the company’s valuation double in less than a year to $3.5bn, as investors see promise in a group that is working with Apple, Facebook and Twitter as part of their forays into e-commerce.
The San Francisco-based business, founded in 2010 by Irish brothers Patrick and John
Collison, is the latest tech start-up to benefit from soaring valuations. It follows an $80m fundraising in January that valued the company at $1.75bn and will help with expanding into more countries and new areas of online commerce – reports the FT.
The company provides online retailers with technology that enables them to accept payments through their app or site. Only a fraction of retail spending happens online, however. In the US, ecommerce represents less than 6 per cent of the market.
Patrick Collison said Stripe’s goal was to improve the complex infrastructure for online payments.
“There’s commerce that could be happening and isn’t happening today,” he said.
Stripe has benefited from broader changes to the ecommerce sector this year, driven by the rise of mobile and social network commerce.
Apple tapped the company as one of a small number of launch partners for Apple Pay, its mobile payment service. Stripe has also linked-up with Facebook and Twitter as they launched features to enable users to buy products that they see featured on the social networks.
Stripe this year worked with Alipay, the payments partner for Alibaba, the Chinese ecommerce group, to help online retailers outside of China accept payments made by Chinese consumers.
“People were previously being kind of unambitious about what was possible, and now through things like the buy buttons on Twitter and Facebook or enabling Alipay, I think people are starting to see what might be possible,” Mr Collison said.
Investors in the round include Sequoia Capital, General Catalyst, Founders Fund, and Khosla Ventures, as well as Thrive Capital. The company is still sitting on much of what it raised in January, but it wanted to “err on the side of being really well-capitalised” in case markets cool down, Mr Collison said.
Stripe is far from the only tech start-up whose valuation has risen precipitously this year as investors and founders make the most of the industry’s boom times. Ride-hailing app Uber is in talks to raise $1bn at potentially double the $17bn it was valued at in a June round. Airbnb, the apartment-sharing company, was valued at $13bn last month, up from $10bn earlier this year.