Below is a synopsis example for a unicorn startup. Updated as of May 2022.
Summary:
Stripe is an online payment infrastructure company that launched in 2011 and is primarily focused on providing FinTech solutions for businesses of all sizes. It offers 18 SaaS products in areas such as payments, financial services, and business operations. Stripe’s overall strategy is to be the platform for all business and finance operations. It has completed 8 rounds of investments, with $2.23B capital raised and a valuation of $74B. Most recent financial data showed that Stripe generated $7.4B revenue in 2020. Stripe has established a strong brand identity in the market and is seen as a prime target for IPO. The bear market has not slowed Stripe’s growth which is a testament to Stripe's resilient and robust business model. Despite similarities with various competitors like Paypal or Adyen, Stripe has captured 16.67% of the market in a little over 10 years.
Product:
There are 3 main buckets of products that Stripe offers: Payment, Financial Service, and Business Operation. Payment products include Payments, Pre-built Checkout pages, Payment links, Connect (Platform), Elements (customizable UI), Invoicing, Billing, and Terminal (in-person payments). Financial Service products include corporate card, capital financing, issuance, and Treasury (BaaS). Business Operation offerings include Radar (fraud detection), Sigma (custom report), Atlas (new business incorporation), Climate (carbon removal), tax, identity and revenue recognition accounting software.
Customer:
Stripe’s primary customer segments are online merchants and retailers with large transaction volumes. It has customer relationships with established technology firms like Google, Amazon, Instacart, Lyft and Shopify. The partnership is beneficial to Stripe as these transactions are priced based on the percentage of sales. The current payment pricing is 2.9% + 30c for every transaction which is competitive with the market leaders.
Competitors:
Traditional payment processors like Adyen, Block and PayPal are the main competitor to Stripe’s core payment products. For Financial Service and Business Operation products, main competitor include big banks like Chase, BofA, etc.
Management:
Stripe has 10 executives with a good mix of business and technical background. Below are the co-founders and key technology executives.
Patrick Collison, Cofounder and CEO: A serial entrepreneur and scientist, Patrick founded Auctomatic before co-founding Stripe with his brother John. His love for science makes him an incredible innovator since he is constantly looking to add on new products with Stripe. He was able to secure seed funding from investors like Peter Thiel and Elon Musk. He attended MIT before dropping out to focus on Stripe.
John Collison, Cofounder and President: Similar to Patrick, John is a serial entrepreneur who has been with Patrick every step of the way, from Auctomatic to Stripe. He manages most of the company’s internal affairs as President. He and his brother were dubbed the youngest billionaire in 2016.
William Gaybrick, CPO: William comes from a finance and law background, graduating from Harvard and Yale Law School before joining Stripe a few years after graduation. Although he has been with the company since 2015, he started as the CFO and has only been Chief Product Officer since 2018. His lack of product experience may concern investors and his impact is yet to be determined.
Financials:
Metrics in Pitchbook shows 2020 total revenue to be $7.4B which is a 1,400% increase from 2018’s revenue of 528M. Stripe’s Net Profit Margin is 0.63% but we cannot infer any useful data from this since we don’t have YoY comparison data. The employee headcount 2021 YoY growth of 1,019% could be attributed to the various new products that Stripe introduced in the last few years. It may also be attributed to the boom of online sales during the pandemic. The increased headcount should provide additional product support to its 18 products which will help Stripe solidify its presence and diversify its revenue streams.
Risks:
Competitors: With almost 1/3 of all VC funding going into FinTech, there is no shortage of new FinTech in the market which may hinder Stripe’s growth in the market. The recent valuation of $74B put Stripe ahead of Block and Adyen. This puts higher expectation for Stripe to provide robust growth numbers comparable to Block’s 86% YoY 2021 revenue growth. There may be some headwind coming from Stripe when it comes to growth due to its competitors. Square and PayPal have the capital and resources to aggressively launch a campaign to steal market share from newer companies like Stripe. They have the capacity to compete with Stripe on Financial Service and Business Operation and has shown an appetite to enter these spaces.
Products: By offering over 18 different products, Stripe may be stretching itself too thin when it comes to providing exceptional FinTech products in a crowded market. There may be some overlap with some products (e.g Payments and Payment links) which may cause confusion for customers who are deciding which products to select. There may be value for Stripe to consolidate or bundle products and offer fewer selections. Customers may be more incline to use Stripe products for all its business needs if all their needs could be covered with just a few products.
Conclusion:
Stripe has an established presence in the FinTech industry and will continue to grow at a healthy rate for the next few years. The robust and scalable nature of its business model should provide investors with confidence in Stripe; however, they will need to keep a keen watch on the reactions of Stripe’s competitors. Stripe does an excellent job in developing targeted audience marketing to retain key customers and opening up new avenues for potential partnership with smaller merchants. It does a superb job in using effective marketing mediums like social media or search engines to engage with the general audience and market simple solutions to complex challenges.
Given that Stripe have already secured multiple rounds of funding along with a healthy revenue stream, one can assume that Stripe is a prime target for IPO in the next year. There may not be any opportunities to directly invest before its IPO so investors will likely have to pay a premium to buyout current VC partners. Overall, Stripe is a company worth looking if you are looking to fortify or diversify a portfolio.
Sources:
PitchBook
Crunchbase