Stripe Cut Down, Should Fintech Startups Be Concerned?
Stripe was the talk of the town among fintech enthusiasts on the African continent following the reported $ 200 million acquisition of Nigerian Paystack, making it Stripe’s largest acquisition worldwide and the largest startup acquisition to date to come out of Nigeria.
The platform was founded in the USA and processes credit cards and online payments for companies. Stripe has established itself as a well-known name for being without a doubt the most efficient and user-friendly software for online payments globally.
With its payment processing platform and a credit card payment port, Stripe assures its users of a 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 the report, fintech bought $ 131.5 billion over 4,969 deals, or about 21% of the total amount achieved.
Later, in July this year, signs of problems in the form of redundancies such as fungi began to appear in the fintech sector.
Recently, as the market downturn begins to hit the fintech sector particularly hard, Stripe is the most well-known fintech company that has experienced a significant decline in value.
The payment processor, whose shares were last worth $ 95 billion, has reduced the internal value of the shares by 28%, insiders told the Wall Street Journal.
Together with Stripe, Klarna, a Swedish BNPL start-up, also saw its valuation drastically reduced from the previous round to $ 6.7 billion when it applied for $ 800 million in new funding.
Unlike 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 has cause for concern. There has undoubtedly been no shortage of negative reports in the past that have affected the industry.
Press coverage of the decline in investments, huge layoffs and falling stock prices have hammered the entrepreneurs in this field.
There is not enough money. An increasing number of experts agree. Business leaders in the fintech industry should be concerned about this, since money is king.
This is especially true for new businesses that are not yet making money. Therefore, news that investors are investing less in the area should scare them.
In addition, if this affects leading fintech companies such as Stripe at this time, it can also be argued that other fintech companies may also face the same difficulties and reduce stocks appropriately.
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