Stripe's $35 billion valuation powers global battle against consolidating processors

As incumbent merchant acquirers have gotten larger through massive M&A deals, Stripe has been bulking up as well, including a fresh investment to fuel a cross-border merchant technology stack.

General Catalyst, Sequoia, Andreessen Horowitz and other investors have poured $250 million into the San Francisco-based Stripe at a pre-money valuation of $35 billion. The new investment came almost a year to the day after Stripe's valuation passed the $20 billion plateau, which made Stripe one of the world's most valuable private startups at the time and followed an active period in which it won Google and Uber as clients.

Stripe's new round will fund what it's calling the Global Payments and Treasury Network, a roster of products that cover payment technology, billing, financial services and other merchant products that are designed to extend Stripe beyond its core business of selling technology development tools that enable businesses to accept payments online.

It comes a few days after the company released Stripe Capital, a digital version of merchant cash advance. Stripe is targeting e-commerce marketplaces that are in the Stripe Connect program, allowing them to offer Stripe Capital to their own clients. Stripe also recently released a corporate card to serve what it sees as a spend management gap at internet companies.

Stripe did not provide an executive for an interview on Thursday afternoon, but said it would invest heavily in its Global Payments Treasury Network to serve new markets — Stripe also recently added eight new countries and is on pace to reach 70% of the global economy, the company said.

Stripe has also expanded as the app economy has grown, adding Wayfair, Airbnb, Twilio, GitHub and the RealReal as clients.

These partnerships and the new valuation give Stripe influence over merchant technology development, since it can often reach its clients' own clients, as is the case with Stripe Capital. Taken together, these efforts give Stripe the scale to compete with merchant acquirers that have gotten larger through acquisition.

Merchant acquiring has changed dramatically in the year since Stripe's valuation reached $20 billion. Many of the largest incumbent providers — First Data, Worldpay and Global Payments — have been part of acquisitions involving global bank technology companies, mainly to build scale through combining financial services with payment processing. The three largest deals, which came against a backdrop of emerging rivalries with relatively smaller, younger challengers such as Square and Stripe, have now officially closed, enabling broader product combinations for merchants.

Stripe and Square have been maneuvering at the same time, countering the traditional merchant acquirers while competing with each other and other alternative digital technology companies. Square recently sold online delivery business Caviar to DoorDash to free up capital to focus on Square Cash, which Square has found can form a basis for both consumer- and merchant-facing products. Square also expanded its new point of sale hardware to Japan and the U.K. to lure merchants that are new to contactless payments.

Stripe's larger valuation also gives it power to make acquisitions of its own. It recently acquired TouchTech to add advanced authentication in line with PSD2 compliance in Europe, but also in anticipation of mobile payments and e-commerce expanding in other parts of the world.