Stripe’s funding: Go big or go home!

I was just reading about Stripe‘s $ 80M investment today (full disclosure: Stripe is a partner of FreshBooks where I work. And we love them…). They raised $ 80M at a $ 1.75B pre-money valuation. So, what am I thinking about this?

  • YCombinator has yet another company in the $B club
  • Payments is super hot right now. Braintree was recently bought for $ 800M. The business of moving money around has never been hotter.
  • Stripe has no choice now but to go for a unicorn size outcome. More on this point:

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I’m hiring a BD Manager

I’ve been on board at FreshBooks for a few months now. We have lots of things brewing in the Biz Dev group and it’s time to expand. I’m looking for  someone to join the team. If this is you, we would love to hear from you.

Director/ Manager of Business Development

FreshBooks is the # 1 cloud accounting specialist designed exclusively for small business owners. Since 2004, we have been helping entrepreneurs make it easy to invoice, get paid and manage their business finances. To date over five million people have used our service.

The Opportunity

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SMB: The Third Market

Through some happy coincidence, I have spent almost my entire career either in or serving small business. When I was a young accountant in public practice I served small business owners.  Later on, I was part of a restaurant and small retail chain. More recently, I had my own small business offering CFO services to young startups. Perhaps as a result of all this when I was a VC and advisor I focused on SaaS companies that targeted SMB including SweetIQShopify, FreshBooks and many others.

I love SMB. Small and mid-sized businesses drive our economy. They employ almost everyone and increasingly people are choosing to leave “corporate” jobs in order to work for themselves. Over 91% of the “businesses” that exist have less than ten employees. That will only increase over time. In fact, oDesk forecasts that by 2020 more people will work for themselves than hold down traditional “jobs”.

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When Valuation Doesn’t Matter

Most of the time, the price an investor is willing to pay to invest in your company is a hotly debated topic. Valuation is always important to founders. But for investors there are some rare times when it (almost) doesn’t matter.

When Kleiner Perkins invested in Twitter in 2010, they were criticized for completely missing web 2.0 and having to buy their way back in. No less an authority than Om Malik had this say:

“There was a time when venture capital firm Kleiner Perkins Caufield & Byers, was the first money in hot, new start-ups. These days, it seems the best KPCB can do is edge its way into hot start-ups at a massive premium like with the funding for Twitter”.

Kleiner invested in Twitter at what at the same time seemed like a very lofty $ 3.7B valuation. Three years later, Twitter is now public and worth $ 23B. So in three years that investment has generated over a 6x return (on paper). i.e. it has doubled every year. Not too shabby.

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