(Reuters) – U.S. fintech startup Stripe Inc said on Thursday it raised $600 million, as companies that provide the online infrastructure for financial and payment services get a boost from the coronavirus pandemic.
FILE PHOTO: Patrick Collison, co-founder and CEO at Stripe, delivers a keynote speech at the Mobile World Congress in Barcelona, Spain February 24, 2016. REUTERS/Albert Gea/File Photo
Fintech start-ups attracted a flood of investments last year as they pushed digitalization in financial services. The pandemic is accelerating the trend as more customers look to pay without contact and use banking services without stepping into branches, venture capitalists say.
They do not expect that to change even after the virus is under control.
“This is a one-way street,” said QED Investors founder Nigel Morris.
Stripe, whose products let companies receive online payments and bill customers, raised $250 million in a Series G round in September. The latest is an extension of that round and the company is now valued at $36 billion, it said.
High hopes for fintech infrastructure companies differ from the broader start-up outlook, with venture capital largely frozen.
In late March, Fast, a one-click check-out tech company started late last year, raised $20 million in a funding round led by Stripe.
Fast founder Domm Holland said he started the company after he saw his wife’s grandmother struggling to order groceries online as she forgot her password.
Finix, which helps software companies and online platforms add payment options, raised $35 million in February and an additional $10 million again in March.
Earlier this month, SoFi, an online personal finance company, said it signed an agreement to buy Galileo Financial Technologies, a financial service and payments platform company for $1.2 billion.
As some tech start-ups lay off workers, fintech executives say they are snapping up talent.
“For the people that have a strong balance sheet and many years of runway, this is a huge opportunity,” said Mark Goldberg, partner at Index Ventures, which invested in Fast. He has told the company to “go hire amazing people.”
HackerRank, an online platform companies use to skills-test new coding hires, said fintech customers’ use of its assessment platform was up nearly 40% in the first three months of this year, while use by the broader computer software industry and internet industry was down 35% and 39% respectively.
Despite some of the high-profile investment deals in fintech infrastructure, Goldberg says the coronavirus pandemic-induced recession will result in a “healthy pruning” of companies in fintech.
“For us to invest in something, it’s going to have to be really special,” said QED’s Morris. “But there are really special things out there.”
Reporting by Jane Lanhee Lee; Editing by Lisa Shumaker and Dan Grebler