API-for-payments startup Stripe is raising a new round of funding, according to sources with knowledge of the talks. One source with direct knowledge of the talks tells us that one of the leading investors in the deal is Yuri Milner’s DST Global.
While all sources maintained that the round was “big,” there wasn’t a consensus on how much Stripe is looking to raise. The aforementioned source said that the round could be as big as $500 million and another source said the financing round would raise Stripe’s valuation to $5 billion.
With companies staying private longer, raising a large amount of funding isn’t out of the realm of possibility. Just earlier this month, fellow Y-Combinator alum Zenefits raised $500 million at a $4.5 billion valuation.
Stripe has seen rapid growth and is known for being very developer-friendly, having impeccable customer service, and being easy to implement. Processing payments can be quite a headache for young startups, and Stripe tries to make the process as easy as possible so that they can focus on what’s important: building a company.
So far, the company has raised $190 million from some high-profile investors, including PayPal cofounders Elon Musk and Peter Thiel, Box CEO Aaron Levie, Khosla Ventures, Andreessen Horowitz, and Sequoia Capital.
It also added a new product called Stripe Connect to help marketplace companies — like Lyft, which needs to accept payments from customers and send payments to drivers —and partnered with Twitter and Facebook to power the respective companies Buy buttons. Stripe also inked a deal to support AliPay, which might be coming to the US soon.
The fundraising round could be used to further spur global expansion. Milner has invested in social media giants Facebook and Twitter, and more recently turned his focus to international e-commerce and marketplace companies, like FlipKart and Ola Cabs. International expansion costs money — Stripe currently operates in 20 countries, while competitors like Braintree support worldwide coverage.
That being said, Stripe will be facing some increased competition from an independent PayPal when the latter spins off from parent company eBay sometime during the Q3 of this year. PayPal acquired payment processor Braintree in 2013 for $800 million, which has some big clients, like Uber and Hotel Tonight, and launched v.zero, a new payment API to help developers. Smaller competitors are itching to go abroad as well — WePay raised $40 million to expand marketplace payment processing across the globe.