Silicon Valley Startup Stripe Helps African Entrepreneurs Set Up In The US, Raises $245M Round
Silicon Valley-based online payments company Stripe has raised $245 million at a $20 billion valuation and plans to use some of the money for international expansion.
With customers including Target, Lyft, and Amazon, Stripe was used by half of all Americans who bought something online in 2017, according to Bloomberg. In other words, those transactions were done through a business whose payment was processed by Stripe.
Stripe is the most valuable financial services startup in the world, Business Insider reported. It has more than doubled its valuation in two years. In late 2016, Stripe raised $150 million at a $9.2 billion valuation. This latest round was led by Tiger Global Management, Sequoia, and DST Global. All in all, Stripe has raised $685 million in funding from investors including CapitalG (formerly Google Capital) and Visa.
“Though the funding round is modest by today’s frothy tech industry standards, the $20 billion figure places Stripe among an elite handful of the world’s most valuable private startups, including Airbnb, Palantir and Uber,” SF Gate reported.
The $245 million will go toward product development, international expansion, and building out Stripe’s payments network.
To offer this service, Stripe teamed up with partners including Silicon Valley Bank, law firm Orrick and consultancy PwC. The service lets any foreign entrepreneur incorporate a U.S. business entity (in Delaware), get a U.S. bank account (Silicon Valley Bank) and tax ID and set up a U.S. Stripe account to receive payments. The service costs $500 per business and gives users access to tax advice from PwC, legal advice, and credits from Amazon Web Services.
The U.S. has some of the best banking infrastructure in the world, and in some cases acts as a tax haven for foreign companies, according to an earlier Moguldom report.
Stripe recently led an $8 million Series A round for Y-Combinator-backed Paystack, a Nigerian fintech startup providing payment tools to businesses across Africa. Stripe, Visa and Tencent contributed to the series A funding.
Stripe President John Collison says that he’s seeing a ton of growth from internet businesses expanding into the real world — like Stripe customer Warby Parker, Business Insider reported.
In an environment dubbed “The Retail Apocalypse,” that could be really good news. Especially since online shopping has been blamed for the destruction of chains, department stores, malls — anything built out of bricks and mortar.
Stripe President John Collison said the company is building new products to make it easier for internet businesses to adopt new technologies and “stay on the right side of the continued evolution of online commerce.”
Stripe was founded by immigrants
Stripe was founded in 2010 by Irish brothers Patrick and John Collison, who immigrated to Silicon Valley for careers in software. After experimenting with different businesses, the Collisons hit on the idea of making it easier for startups to set up their online billing and payment systems.
Now dubbed “The Stripe of Africa,” Paystack plans to use its $8 million to expand outside of Nigeria into the rest of Africa.
“The Paystack founders are highly technical, fanatically customer oriented, and unrelentingly impatient,” Patrick Collison, CEO of Stripe, said in a prepared statement. “We’re excited to back such people in one of the world’s fastest-growing regions.”
Stripe wants to attract entrepreneurs from Africa, Latin America, the Middle East and parts of Asia, the company said. Most of the growth over the next 10 years will come from these markets, Patrick Collison said in a 2016 statement. “This represents about 6.2 billion people we don’t reach yet, and it would be a huge missed opportunity if we didn’t try to do so.”
Setting up a company in Nigeria takes 31 days according to World Bank estimates, TechCabal reported. In Kenya it takes about 30 days while in the U.S., the process takes six days.
“The move is bound to cause a stir among African startups, which are often set up in countries with complex and opaque regulatory systems.” — Tech Cabal.