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The environment for start-ups and fundraising has changed significantly over recent years according to John Collison, President of Stripe, after the fintech announced a significant milestone this week.

In an interview with CNBC, Collison offered a macroeconomic breakdown of the international payments sector following the news that Stripe surpassed $1trn in total payments volume in 2023, a 25% increase on the year prior.

As the founder of a start-up business himself, which kick started a journey leading to him becoming the world’s youngest self-made billionaire, the Irish businessman is in a unique place of expertise to comment on the environment such companies are operating in.

“I think there’s two things going on,” he told CNBC. “Firstly, the fundraising environment has changed and so we’re seeing startups growing with maybe less funding or less expensive funding than there was in 2021. 

“Things got a bit mad at the peak of 2021 where we had these $10m Series B rounds and things like this. So I think startups are focusing on more profitable growth.”

This observation comes at an interesting time, with the publication of the CNBC video interview roughly coinciding with the publication of the Payments Innovation Jury 2024 report.

In this report, which Payment Expert broke down this morning, a focus on early stage profitability rather than late stage growth was detailed as a key observation for both start-ups and investors looking to pay stakes in these firms.

However, the operational focus of these start-ups has also changed, with emerging technologies – most significantly artificial intelligence (AI) – becoming the key area of interest for many firms.

Collison continued: “The second thing is that the kinds of startups we’re seeing are changing and so there’s tons of AI startups – think of OpenAI, Midjourney and do and Anthropic, and all these folks building on Stripe.

“What we see with AI startups in particular – they’re growing very quickly, they’ve grown by nearly 250% last year, the sector of AI startups overall. What we’re seeing with those is because inference costs are so high for AI products, you tend to see paid products from these new startups much earlier than you would see from other companies.”

Again, this is a trend noted in this week’s juror’s report – AI is the big investment magnet in tech business and its financial uses are becoming more and more realised. For example, at ICE London this year Payment Expert heard insights from SEON on the potential of AI for fraud prevention.

So how is Stripe performing in this context? Based on its clearance of $1trn in payments volume last year, pretty well. 

Although staggering early last year, along with some other fintechs, the firm was able to bounce back quickly with a $3bn funding round leading to a valuation of around $55bn-$60bn. This has now risen to around $65bn.

Meanwhile, the company counts over 100 other firms as partners, with many startups looking to leverage the company’s financial services and software-as-a-service platforms. Meanwhile, deals were inked last year with Open Banking specialist TrueLayer and London’s Heathrow Airport.

Collison noted that AI has become a big draw for investors, and Stripe is itself looking at how to make use of the technology. Stripe’s motivations, according to Collison’s interview, are primarily to increase productivity.

“We’ve been using it very extensively and we’ve found honestly that MLMs are very powerful for augmenting human performance and making people more productive,” he said. 

“Maybe you’ve had this experience of you know, you’re going to chat GPT or you’re going to Claude or one of these AI models, and you’re kind of going back and forth with it to work through a problem. 

“I think people tend to too quickly jump to the paradigm of robotics eating the jobs and will we be replaced by a AI’, I think the much more common pattern we see is maybe people get 10%, 20%, 30% more productive in their job, and so you get an overall productivity increase, but it maybe looks different.”