Payments Startup Marqeta More Than Doubles Valuation To $4.3 Billion

via Forbes

Oakland-based fintech startup Marqeta has raised $150 million in new funding from a single investor at a $4.3 billion valuation. It’s a steep rise from the $1.9 billion it fetched in March 2019. Marqeta declined to comment on the investor’s name, but a person familiar with the matter says it’s Capital Group ACGL, the Los Angeles investment firm that runs American Funds and has $1.7 trillion in assets under management. (Capital Group declined to comment.) 

Since the coronavirus started sweeping the U.S. in February, few private companies have seen their valuations surge. Payments giant Stripe inched up from $35 billion in September 2019 to $36 billion in April 2020. Credit card startup Brex saw only a slight increase in its prior $2.6 billion valuation when it raised money earlier this month. Public companies have struggled—the S&P 500 is down 10% from its February 19 peak.

Marqeta is bucking the trend with its payments software. For companies that issue debit cards to workers or customers, Marqeta’s technology gives them more controlover which transactions are approved. For instance, Instacart uses Marqeta to restrict which items its delivery people can buy, helping prevent fraud.

In 2019, Marqeta’s revenue exceeded $300 million, doubling its 2018 number. This year, CEO Jason Gardner says it’s growing faster than he had forecasted even before the coronavirus struck. That’s due to soaring demand among key customers like Instacart and DoorDash. “On-demand delivery transaction volume has tripled in the past three months,” Gardner says. Marqeta makes money on every Instacart and DoorDash order. It’s also benefiting from the strong growth of another client: Square SQ’s money-transfer and digital banking app, Cash App.

The new investment was an opportunistic fund raise, Gardner says. “We have years of cash in the bank.” Given its growth, size and stage—it was founded in 2010—an IPO over the next year seems likely. A Marqeta spokesperson says the company is considering going public but doesn’t have a timetable. Fintech-focused investment bank FT Partners advised Marqeta on the $150 million funding round.

With Marqeta’s new valuation, Gardner’s personal net worth now exceeds $400 million, Forbes estimates. 

Over the past year, investors have shown sky-high demand for payments companies. As more transactions move digital, some fintechs are reaping the rewards. Visa V’s $5.3 billion acquisition of Plaid and SoFi’s $1.2 billion acquisition of Galileo are examples. And PayPal and Bill.com are among the rare public companies that have seen their stocks rise since the pandemic began.