Stripe Ramps Up Preparations For Blockbuster IPO In A Record Year For Fintech Performance

It’s forecast to be one of the biggest fintech debuts the investing landscape has ever seen, and Stripe has been steadily ramping up its preparations ahead of a huge 2022 IPO. With both the initial public offering market and fintech industry thriving, the timing of the floatation may prove to be perfect for the renowned payments provider.

The company has recently announced that it’s intending to hire hundreds of new staff members in a bid to undergo significant expansion into Europe alongside its IPO. “We’ve always had European origins as a firm, but they’re becoming increasingly important,” said Matt Henderson, Stripe’s business head for Europe, the Middle East and Africa. 

Stripe’s expansion into Europe has been steadily gathering momentum over the past year, the company began hiring new engineers for its London office in 2020 and expects this momentum to continue into the future as Stripe sets its sights on global growth upon going public.

As part of its IPO preparations, Stripe’s London office is set to focus largely on growing non-financial company offerings, like bank integrations such as transfers and open banking. In fact, in the coming weeks, engineers will begin testing a “pay-by-bank” integration to the payments network. 

With such activity bubbling under the surface, it’s perhaps no surprise that Stripe has reportedly entered into early discussions with investment banks about the prospect of going public in 2022. The 11-year-old payments provider is said to be considering an initial public offering, but may even opt for a direct listing – although plans were subject to change. 

Most valuable VC-backed companies in the US
Image: The Strategy Story

As 2021’s most valuable private firm in the US, weighing in at a seismic valuation of $95 billion, the prospect of a Stripe IPO would undoubtedly cause a stir to say the least. Should the favourable market conditions that we’ve become accustomed to this year continue into 2022, an initial public offering for the payment giants may return record-breaking results. But what would a Stripe IPO look like? Let’s take a look at what the future has in store for the wildly successful fintech startup.

What A Stripe IPO Could Look Like

With an estimated value of almost $100 billion, a debut would mean that Stripe overtakes fellow fintech Coinbase’s direct listing in April 2021 at a value of $86 billion. Like Coinbase, Stripe may decide to avoid launching an IPO entirely, opting for a direct listing instead. This would mean that investors will need to wait until the stock arrives on its chosen market on its first day of trading, which is likely to be the NASDAQ at the time of writing. 

The company has reportedly already begun the preparatory process of going public by hiring law firm, Cleary Gottlieb Steen & Hamilton LLP as a legal advisor on the early stages of their preparations. However, there’s still very little that we can know in terms of absolutes as to when, where and how a Stripe stock is set to arrive. 

Can Stripe’s fundamentals support a mega IPO? Well, the company raised $950 million through VC funding in 2019 and 2020 alone – with a $600 million round arriving in 2020 during the peak of the Covid-19 pandemic. The company itself experiences sizeable growth during this period due to the rise of online shopping and electronic payments. With a further $600 million raised in 2021, Stripe’s revenues had reportedly climbed to $1.6 billion in 2020, with a workforce 4,000 strong at the time. 

As for competition, Stripe has industry giants like PayPal and Square to compete with. With a market cap of $305 billion at the time of writing, PayPal is a formidable competitor for Stripe – and one that may yet stifle the fintech’s expansion efforts. But amidst a rapidly growing fintech market, there’s likely to be room for both entities to comfortably co-exist to the point where this shouldn’t hinder a prospective Stripe IPO. 

Capitalising On A Prosperous Fintech IPO Market

Funding YTD Exceeds Total Funding In 2020 By 24%
Image: Digital Insurer

The emergence of the Covid-19 pandemic had a significant impact on the fintech industry. Digital transformation brought with it a widespread trend towards more online shopping and electronic payments – which has helped to aid the sustained growth of countless emerging fintech firms. 

As the data above shows, it took just seven months in 2021 to overtake the global VC-backed deal activity for fintechs in the entirety of any of the five years prior. This illustrates the seismic growth that is sweeping through the industry. Although this indicates that growth is occurring for Stripe’s direct competitors in the industry, it also opens the door for more advanced collaborations across the fintech landscape. 

We can see evidence of emerging technologies in the field of decentralised finance and borderless payments that can collaborate with fintech institutions to deliver more advanced products. In the case of emerging companies like Connectum, we can see an example of a VC-backed platform that has the ability to deliver borderless financial services through multi-currency processing, one-click payments and 3D secure, AI-powered transactions to send money globally in a frictionless way. Alchemy Pay is another example of a blockchain-based startup that has the potential to advance fintech dramatically in the future, thanks to greater VC interest. 

Quarterly Global Fintech M&A And IPO Activity
Image: FX Street

As the table above illustrates, global fintech M&A and IPO activity are also on the rise – indicating that the industry is maturing at an unprecedented rate. With 10 and 11 IPOs arriving in Q4 of 2020 and Q1 of 2021 respectively, it’s clear that the fintech industry is booming at present. 

This shows that the prospect of a Stripe debut is likely to be a significantly popular one across the market. Should momentum continue to build from 2021 into 2022, Stripe’s debut, regardless of whether it’s an IPO or direct listing, is certain to be a key contender for the biggest of the year – and a real statement of intent for the wider world of fintech. 

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