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Stripe bags $35B valuation as B2B payments sector matures

Stripe announced Thursday that it has secured a $250 million round from investors including General Catalyst, Sequoia and Andreessen Horowitz.

The funding comes at a pre-money valuation of $35 billion, a significant step-up from the B2B payments company’s last reported valuation of $22.5 billion. It surpasses that of several other highly valued companies, including Airbnb and SpaceX, vaulting Stripe into third on the list of the most valuable US venture-backed businesses. And with rumors around corporate-backed Juul’s valuation tumbling due to health concerns about vaping and WeWork reportedly slashing its worth as low as $10 billion in the run-up to its IPO, Stripe could arguably hold the coveted title of the most valuable VC-backed company in the US.

Co-founded by Irish entrepreneurs Patrick Collison‎ and John Collison, Stripe has a suite of payment tools to help ecommerce companies and online marketplaces conduct secure credit card transactions, accepting customer payments and then paying the third-party sellers who list goods or services. The San Francisco-based company is also backed by VC stalwarts including GV, Khosla Ventures and Kleiner Perkins, as well as PayPal co-founders Peter Thiel, Max Levchin and Elon Musk.

Stripe has raised around $1.2 billion since its founding in 2010 and has no plans for an IPO, per The Wall Street Journal. The new funding announcement comes two weeks after Stripe announced the addition of a lending tool and corporate credit card for small businesses on its platform; it also launched its services in eight additional European countries last Monday.

Stripe’s new funding is the latest in a vertical that’s no stranger to mega-deals in recent years. The B2B payments sector has drawn significant investor interest as startups in the space develop increasingly innovative tech and add to a growing list of services, such as electronic invoicing, international payments networks, blockchain B2B solutions, payments analytics and virtual payment cards.

Since the start of 2015, VC-backed companies in the B2B payments vertical have raised 15 mega-rounds in the US, with several companies raking in multiple such deals, per PitchBook data:

Although Stripe’s new funding is significant, North Carolina-based AvidXchange tops the list with respect to deal size, thanks to its $300 million fundraise in 2017. The company is a creator of invoice automation and bill payment processing software. Another buzzy startup with multiple appearances on the list is Brex, which provides corporate credit cards to startups and other businesses. Backed by investors including Kleiner Perkins and DST Global, the young company—it only launched publicly in June 2018—is currently valued at $2.6 billion and opened a restaurant in San Francisco’s South Park neighborhood earlier this month. Another notable startup on the list is Marqeta, which helps third-party clients such as DoorDash and Instacart issue, process and manage payment cards.

Several high-profile VC firms, as well as angel investors, have been fairly active in the B2B payments sector in the US since the beginning of 2010. Kleiner Perkins, which has invested in Stripe and Brex, boasts the largest deal count with 12, followed by Max Levchin, 83North and August Capital with nine investments each, again per PitchBook data. Click on each of the top investors in the list below to find out more:

It seems that the rise of mega-deals in the sector can partly be attributed to a handful of startups that have identified the pain points of the current payments landscape and are specifically targeting the US middle market, which often consists of small businesses facing challenges around working capital availability, high processing costs and fraud risk.