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Home Startups

Stripe cut down, should Fintech Startups be worried?

by Cynthia Nwanonyiri
2022/07/16
in Startups
Stripe - techbuild

Credits: Stripe

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Stripe was the talk of the town among fintech enthusiasts on the African continent following its acquisition of Nigerian Paystack for a reported $200 million, making it Stripe’s largest acquisition worldwide and the largest startup purchase to date to come out of Nigeria.

Founded in the United States, the platform processes credit cards and online payments for businesses. Stripe has established itself as a household name for being arguably the most effective and user-friendly software for online payments globally.

With its payment processing platform and a credit card payment gateway, Stripe assures its users of successful online transaction. Lately, the giant fintech platform has been in the news for not so good reasons.

It is undeniable that fintech startups received the most venture capital in 2021; according to report, fintech acquired $131.5 billion over 4,969 deals, or around 21% of the total amount obtained.

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Later, in July of this year, signs of trouble began to emerge in the form of layoffs that were mushrooming in the fintech sector.

Recently, as the market slump starts to hammer the fintech sector particularly hard, Stripe is the most well-known fintech business to suffer a significant valuation fall.

The payments’ processor, whose shares were last worth $95 billion, has reduced the internal value of its shares by 28%, insiders informed the Wall Street Journal.

Along with Stripe, Klarna, a Swedish BNPL startup, also saw its valuation drastically reduced from its previous round to $6.7 billion when it sought $800 million in new funding.

Contrary to Stripe, investors in Klarna, including Sequoia, Silver Lake, Commonwealth Bank of Australia, Mubadala Investment Company, and Canada Pension Plan Investment Board, reduced the company’s valuation (CPP Investments).

Fintechs have cause for concern. There has undoubtedly been no lack of negative reports lately affecting the industry.

Press coverage of investment slowdowns, huge layoffs, and falling stock prices has hammered the entrepreneurs in this field.

There is not enough money. A rising number of experts agree with that. Business executives in the fintech industry should be worried about this, as money is king.

This is particularly true for new businesses that aren’t yet making money. Therefore, news that investors are investing less in the area should alarm them.

Additionally, if this is affecting leading fintech companies like Stripe at this point, one could also assert that other fintech companies may also be facing the same difficulty and appropriately reducing shares as well.


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