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.
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
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.
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.
Frost & Sullivan expects automotive OEMs, start-ups, aerospace companies and other players to make significant investments in the flying cars market and showcase their prototypes in the next 10 years. Flying cars are poised to usher in a whole host of new business services by 2035, including aerial sightseeing services, air surveillance as a service, aerial critical aid delivery, air taxi pay-per-ride, and flying car corporate lease. The key to achieving mass commercialisation of flying cars and attracting more buyers will depend on increased safety features, optimal regulations, and affordable prices.
Start-ups across the globe which are actively involved in building a future flying car have been identified by Frost & Sullivan and will be presented at Frost & Sullivan's Intelligent Mobility event on the 29th of June in London. The majority of these companies are based in the United States, however, there are participants from a whole host of countries including the UK, France, Germany, Russia, Slovakia, Israel, Russia and Japan. Among the companies expected to launch flying vehicles by 2022 are PAL-V, Terrafugia, Aeromobil, Ehang, E-Volo, Urban Aeronautics, Kitty Hawk and Lilium Aviation, have completed at least one test flight of their flying car prototypes. PAL-V has gone a step further and initiated the pre-sales of its Liberty Pioneer model flying car, which the company aims to deliver by the end 2018. This and other industry trends will be discussed at Frost & Sullivan's Intelligent Mobility event on the 29th of June in London.
"It will be interesting to see the first applications of flying vehicles. Although the ultimate goal of manufacturers is to address the issue of personal mobility, commercial applications are expected to commence through recreational activities in the form of what could be termed as a single seater flying scooter," observes Sarwant Singh, Senior Partner Frost & Sullivan. "From flying vehicle rides in amusement parks, aerial sightseeing of landmarks, to a star attraction at events, the recreational potential of flying vehicles is limitless."
During its upcoming annual industry event ‘Intelligent Mobility’, taking place on 29th of June 2017 at the Jumeirah Carlton Hotel in London, Frost & Sullivan will offer visionary insights into the future of mobility from leading OEMs and tier-one suppliers, prominent industry thinkers, policymakers and disruptors from companies like Jaguar Land Rover, Facebook, Renault–Nissan Alliance, MAN Trucks, the Financial Times, Mahindra & Mahindra, Transport for London, the Centre for Connected and Autonomous Vehicles, as well as PAL-V International B.V. and Mohyi Labs.
(Source: Frost & Sullivan)
In Latin America, the Big Data and Analytics (BDA) market is gaining pace and undergoing an intense evolution. Innovative business models such as Internet of Things and cloud computing are transforming the market and creating new ways to collect data and improve data storage processes. In addition, companies in the region are becoming more familiar with the concepts and benefits of adopting and implementing BDA solutions.
"Exponential data growth fuelled by connected devices has compelled organizations to revisit their ability to use Big Data to make more intelligent, real-time decisions. Considering the hyper-competitive business environment, this critical need has given rise to a new breed of analytics solutions focused on prediction, data visualization, and dynamic decision making," said Frost & Sullivan Digital Transformation Consulting and Research Director Renato Pasquini. "Technology providers such as IBM, Oracle, SAP, SAS and Teradata are market leaders and have focused on providing solutions for real-time analysis in the Latin American BDA market."
Latin America Big Data and Analytics Market, Forecast to 2022, is part of Frost & Sullivan's IT Services & Applications Growth Partnership Subscription. The total BDA market in Latin America earned $2.48 billion in revenues in 2016. Led by Brazil and Mexico, and driven by digital transformation, the market is expected to reach $7.41 billion in 2022.
Integrating a secure BDA solution into existing legacy infrastructure remains a key challenge, along with acquiring and sourcing talent for analytical and technical skills. Nevertheless, companies are realizing that they need to invest in BDA solutions and find innovative solutions to overcome these challenges in order to remain competitive in a dynamically evolving ecosystem.
Other developments include:
- The Latin America market represents approximately 5.1% of the global BDA market.
- In 2016, the Brazilian market represented 46.8% of the BDA market in Latin America. It is the most mature and generates revenues of $1.16 billion.
- Financial services, retail and telecommunications are key verticals making significant investments in BDA.
- Improving customers' experience is the main reason for investing in BDA solutions.
"Hadoop is becoming the standard for the majority of Big Data projects. This is due to its disruptive characteristics such as open source, free, scalable, low cost and fault tolerance. Once cloud and Hadoop are compatible it would make sense to run them together as they both focus on reliability and scalability at a reasonable price point, which is essential for BDA solutions," noted Pasquini.
(Source: Frost & Sullivan)
