Stripe has this week received a $20 billion valuation following a $245 million round of funding led by Tiger Global. The payments processing leader was previously valued at $9.2 billion after raising $150 million in 2016, and has since grown to serve 130 markets with payment origination in 25 countries. Congruent with its deployment of more than 3,200 versions of its core API this year, Stripe reportedly intends to use this recent funding round to build its “distributed global engineering team.” The company currently has no plans to file for an IPO.
In e-commerce news, Amazon has opened a brick and mortar store in New York City that will carry select products rated at 4 stars or higher on the online platform. The new permanent location will allow Prime members to purchase an array of products at Amazon prices. In a blog post announcing the store, Amazon stated of their strategy, “We started with some of the most popular categories on Amazon.com including devices, consumer electronics, kitchen, home, toys, books, and games, and chose only the products that customers have rated 4 stars and above, or are top sellers, or are new and trending.” The items in the store carry an aggregate sum of 1.8 million 5-star customer reviews.
In digital marketing news, a recent report from Magna Intelligence has revealed that digital advertising has surpassed the halfway point and is now the majority of advertising revenue in the United States. Now encompassing 51.5% of the US advertising market share, digital advertising spend is expected to reach $106 billion of the projected $207 billion net advertising sales market in 2018 (16% growth year-over-year). Advertising on mobile devices in particular is now projected to make up nearly 66% ($70 billion) of all digital advertising dollars spent in 2018, representing a 30% growth year-over-year.
In M&A advising news, Founder Thomas Smale has this week published an expert contribution article to Axial.net, where he covers Why Thorough Preparation is Key to a Successful Deal. Drawing on inudstry-leading due diligence practices, Thomas delves into how the financial and operational details of a deal are the key for advisors to understand each business on a holistic level, and thus successfully close a higher number of deals.
New in e-commerce business listings this week we have a $526K pet supplies store, with a trusted and authoritative brand boasting over a decade of operational history, well-developed supplier relationships offering exclusive product selling rights, strong website traffic with over 1.1 million sessions and keyword rankings for c.23,000 keywords, valuable email subscriber list of c.84,000 double opt-in emails and trained and capable team staying on post-sale.
New in SaaS business listings this week we have a $483K content marketing automation platform, with years of operational history in the lucrative B2B digital marketing niche, multiple essential features leading to a high LTV of c.$3,000 in the past year, well-trained team willing to transition with the business post-sale and high gross margins of c.90% allowing for a scalable cost structure. If you are interested in either of the above businesses, please follow the link to request a prospectus.
In events news, FE had a great time sponsoring MerchConference this week in Seattle, where Founder Thomas Smale is hosting a networking drinks event tonight at the Grand Hyatt Seattle following the conference. Click here if you will be in the area and would like to RSVP! Next week, Thomas is looking forward to Business of Software, where he will be conducting a workshop on Exit Planning – How SaaS Businesses Can Stay Attractive to Buyers, on October 3. Reply to this email to set up a meeting if you will be in the Boston area!
Continue reading below for more on Stripe’s $20 billion valuation, Amazon’s 4-Star Store and Magna’s report on the state of the US advertising market.
Listings
New
E-Commerce – Pet Supplies – $75K gross/mo
- Trusted and authoritative brand with over a decade of operational history
- Well-developed supplier relationships offering exclusive product selling rights
- Strong website traffic with over 1.1 million sessions and keyword rankings for c.23,000 keywords
- Valuable email subscriber list of c.84,000 double opt-in emails
- Trained and capable team staying on post-sale
Yearly net profit: $186,000
Asking price: $526,000
SaaS – Content Marketing Automation Platform – $23K MRR
- Years of operational history in the lucrative B2B digital marketing niche
- Multiple essential features, leading to a high LTV of c.$3,000 in the past year
- Well-trained team willing to transition with the business post-sale
- High gross margins of c.90% allowing for a scalable cost structure
Yearly net profit: $156,000
Asking price: $483,000
Sold
E-commerce – Sports & Medical Apparel – $136K gross/mo
SaaS – B2B Digital Sales & Marketing – $35K MRR
Display Advertising – Science & History – $10.6K gross/mo
In The News…
Stripe Achieves $20B Valuation
Following a $245 million funding round, payments processor Stripe has received a valuation of $20 billion.
Two years ago, the company was valued at just $9 billion after a $150 million round of funding. Tiger Global led this round, along with several new backers including Andreessen Horowitz, Kleiner Perkins, Khosla Ventures, General Catalyst and Thrive Capital. Stripe is reportedly comfortable with private funding, and plans to use this round to further develop the team of engineers located around the world in hubs such as San Francisco, Seattle, and Dublin. “We have no plans to go public,” said John Collison in an interview. “We’re fortunate to be in the position that the Stripe business is performing very well and the long-term opportunity is that we’re very optimistic to providing the richer stack to businesses. Strong businesses do not always tend to be dependent on outside funding.” While the main offering from Stripe is to provide ease of transaction without having to use a bank as a gatekeeper, though Stripe has also been diversifying its offerings to include Stripe Issuing, Stripe Terminal, fraud detection and others. These help the company develop stronger ties with its customers, and also potentially increase its margins.
While online shopping still only makes up about 3% of global transactions, e-commerce is certainly growing steadily, and Stripe itself projects $4 trillion in global online sales by 2020.
Amazon to Open 4-Star Brick and Mortar Store
Amazon has opened a new store that sells 4-star (or higher) products in New York.
In the store now open in SoHo on Spring Street, Amazon Prime members will pay Amazon prices for the items in-store. While Amazon has historically had pop-up shops (one in SoHo last year sold Calvin Klein apparel), this new location will be permanent. This is the first store of its kind for Amazon; the e-commerce giant currently has a few bookstores in the U.S. and has recently made an entrance into Amazon Go, their cashier-less convenience stores. Of the items in the store, Amazon said “Customers can test-drive dozens of Amazon devices and smart home accessories that work with Alexa, and shop a curated selection of speakers, fitness tech, and other highly rated consumer electronics.”
While shopping, customers can see how much they save as Prime members, the average star rating as well as how many ratings a product has received, on digital price tags on the products.
Digital Ad Spend Passes 50% of US Advertising Market
Magna recently released a report covering major advertising and media channels to forecast US advertising revenue in 2018 and 2019.
According to the report, “net advertising sales” will rise by 6.9% for an all-time high of $207 billion in 2018. The report is particularly momentous, because it shows digital ad revenues surpassing 50% the US advertising market’s total spend. Of the total 2018 digital advertising spend, which is projected to reach $106 billion (51.5% of total ad sales), advertising on mobile devices comprises nearly 66% for a 30% growth rate year-over-year, making it a larger portion of the advertising market than either desktop and television. Desktop revenues are projected to decline 4% this year due to a combination of a decrease in usage as well as ad blocking. Digital formats leading the growth were paid search (18% growth), social media (38% growth) and online video advertising (27% growth). The traditional channels like TV, print, and radio were down; cinema, surprisingly, was up by 12% with other out-of-home channels growing by 3%. While advertising growth was up across all industries, Magna noted finance, pharma and technology were the largest spenders in 2018; overall growth in the first half was 6%, but these industries grew their ad budgets by 15-20%.
Magna projected ad sales to grow by 4% overall in 2019.
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