16 March 2021

This Will Not End Well

So, the new hot thing is a payments processor called Stripe, and it is planning for an IPO and has just announced a $95 billion valuation with its series H funding round.

I'm generally dubious of "Unicorns", and when I did a quick Google on Stripe, it appeared to be a fairly anodyne supplier payments processing, with the only "Innovation" I could see being its incorporation in Ireland, which will allow it to avoid most taxes.  (There appears to be no "Secret Sauce.")

It's a dull, if profitable, business with relatively low barriers to entry, but suddenly everyone is talking about making bank when it goes IPO.

I'm not saying that it's a fraudulent operation, its business model appears to be solid, if rather dull.  What I AM saying is that its funding seems to be less about the business than it is about creating a hubbub which which will allow those institutional funders to fill their pockets, walk away, and the retail investor takes the losses when gravity returns:

The payments company Stripe is worth $95 billion after a new round of funding, making it the most valuable start-up in the United States.

The San Francisco and Dublin-based company said on Sunday that it had raised $600 million in new funding from investors including Sequoia Capital, Fidelity Management and Ireland’s National Treasury Management Agency. The investment nearly triples Stripe’s last valuation of $35 billion.

The funding comes amid a surge in the adoption of digital tools and services in the pandemic as more people live, work and make purchases online. That has fueled a wave of investment into, and eye-popping valuations at, tech start-ups, as well as a frenzy of highly valued initial public offerings. Investors have valued Airbnb, the home rental start-up that recently went public, at $123 billion. Roblox, a kids gaming start-up, saw its valuation soar to $45 billion when it went public last week.

Founded in 2010, Stripe builds software that enables businesses to process payments online. As more people have turned to online shopping in the pandemic, Stripe’s offerings have been in demand. It is the largest among a class of fast-growing, highly valued financial technology companies.

Then again, I am always profoundly skeptical of the, "Next Big Thing."


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