Why Stripe bought stablecoin start-up Bridge for $1.1B

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• Summary: In this article, we analyze Stripe's acquisition of Bridge, a young company focused on stablecoin payments, for $1.1 billion. Stripe, previously skeptical of crypto, now sees stablecoins as a superior financial infrastructure compared to legacy systems. Bridge, which moved $5 billion annually at its last raise, was acquired not for its revenue but for its strong team, product maturity, and the massive opportunity in stablecoin-based infrastructure for business banking. Stripe's move aligns with the growing relevance of stablecoins, which processed $7 trillion in volume in 2022, as it targets the untapped potential of integrating stablecoins into the corporate financial world. This acquisition mirrors prior tech successes like Facebook's Instagram buy, and positions Stripe to leverage stablecoins for future growth.

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Stripe’s $1.1B acquisition of Bridge targets the $200B opportunity in corporate stablecoin banking.

Stripe Makes the Crypto Moves

You would not be mistaken to think that Stripe wanted nothing to do with crypto.

After being a leader in accepting Bitcoin payments, the company shut down the service in 2018. The Luddites have won!

Oh wait.

By 2024, the Bitcoin volatility problem had been solved by replacing Bitcoin with digital dollars, also known as stablecoins . But Stripe wasn’t done — not only did they want to support online commerce for merchants that wanted to receive stablecoins as a payment mechanism. They also came to the conclusion that stablecoins are — or perhaps will be — a better financial infrastructure compared to the financial rails of the past, and should be integrated into the company’s core.

Here’s the evidence.

Regular users all over the world are going through the insane friction of having to use crypto infrastructure, while being yelled at by regulators, in order to access first-generation stablecoins like USDT.

As a fintech or finance person, you may scoff at USDT. As a crypto person, you might have questions about Bitfinex or their reserves. We asked those questions too, even getting some answers . But for the millions of people moving USDT in Asia and EMEA, with volumes in the hundreds of billions in these regions, nobody is asking these questions.

They are just using a reliable financial product.

Stripe had enough conviction in this thesis to spend a reported $1.1 billion on acquiring a young company called Bridge that was focused on being “the Stripe of stablecoins”.

What does that mean?

Let’s unpack the deal for both companies, and the industry as a whole.

Is $1 Billion Expensive?

Famously, Facebook acquired Instagram for $1B in 2012. Instagram had a bit over 10 employees and 30 million users. Facebook was worth $66B at the time. Google bought YouTube for $1.6B while trading at $140B on the public markets. When Visa tried to buy Plaid, it offered $5.3B while trading at $400B. Bridge seems to be following the same pattern. The $1B acquisition price is the same percentage of Stripe’s market capitalization, around 1.6%, as the other comparables.

Which is more likely — that Stripe is making a mistake, blinded by market mania? Or that Stripe is following the pattern of other highly successful big tech companies and capturing a competitor before it gains real traction.

In all of these cases, many people refused to believe in the business case for these expensive acquisitions. Have the acquirers paid dearly for their foolish spending?

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