Stripe has long been championed as a great success story, and with good reason. The story of its founding by Limerick brothers Patrick and John Collison and subsequent growth to become one of the most important tech payments firms in Silicon Valley has been well told at this stage.
While the company has long been rumoured to be set to go public, it has up to now remained private and as recently as February it was valued at about $159 billion (€137 billion). Still, it seems clear that the company is now eyeing greater fortunes than it has already achieved.
Stripe has agreed terms to buy AI firm OpenRouter for more than $7 billion, according to reports. That deal comes barely three months after OpenRouter itself was valued at $1.3 billion.
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Clearly, Stripe has felt the need to up its presence in artificial intelligence and was willing to pay what it took to get OpenRouter, whose chief executive Alex Atallah has previously described his company as the AI equivalent of Stripe.
That’s not the only deal involving Stripe at present though. While $7 billion may seem like a big number, it pales in comparison to the $53 billion Stripe, along with private equity firm Advent International, is said to be offering to buy PayPal.
PayPal, of course, is one of the best-known businesses on the web and for years was the payments firm of choice for many consumers. That has changed drastically in recent years, as the likes of Apple Pay, Google Pay and Stripe essentially ate its lunch. While it is still a big business, its share price is down more than 75 per cent compared to five years ago.
What that deal may say about Stripe, though, is perhaps more interesting. Up to now, the company has largely avoided big M&A. While it has bought plenty of companies, they were earlier in their life and not going for comparative fortunes.
The AI craze has played a part in the price of OpenRouter, but Cantillon will watch with interest the success or otherwise of it and PayPal if it goes through.
Deals are often unavoidable, but growing by acquisition doesn’t always work out in the long run. It introduces a significant element of risk execution. It will be worth watching if it works out for Stripe.
