If they are so successful, why do they need to continuously raise money?
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They can go after the PaymentTechs and Worldpays of the world but that is just a race to the bottom on processing fees. Another problem with going after those companies, they can easily drop the processing fees to near zero since PaymentTech is owned by Chase and Worldpay by Vantiv/FIS. Adyen is going to dominate the omnichannel retailers since their solution is best.
This seems to be a recurring pattern in the more innovative online payment services. GoCardless is similarly trying to shift how people pay for things online away from the fragile and unreliable card networks.
Unfortunately, at least for some of us, the problems these services are solving are becoming secondary. The biggest pain points now, as a business selling services online from the UK, tend to be about regulatory compliance issues that increasingly conflict with clean, user-friendly payment processes and about the increasing complexity of global VAT/sales tax rules (and the ever more hostile rhetoric combined with often unrealistic demands from many governments in connection with the same).
I'm looking at setting up a new business at the moment, and our initial assumption is that we won't be using services like Stripe and GoCardless at all any more, even though I've built modestly successful businesses with them in the past. We just don't have time for all of the compliance and tax hassle in every country in the world where someone might buy from us, and while Stripe's new samples and guides have helped with showing how to get their new PSD2-friendly API to work, they also serve to show how horrifically complicated the once-simple process of charging a card online is now becoming. In the near future, I suspect this will push many of us into using marketplace or merchant-of-record arrangements and just outsourcing the whole shebang to businesses large enough to deal with those issues properly, who will no doubt take a larger cut of the revenues in return.
You'd think governments would have been solving these problems at an international level decades ago, but many of them aren't even following the general OECD guidelines they've theoretically agreed. It's bizarre that in 2020, it's actually becoming harder for an honest business to sell a decent product or service to a genuine customer online.
If you don't raise any money at all, you'll be able to build a second factory after 8 years, a third factory after 4 years, and a fourth factory after another 2 years. At that point you're making $4M/year and no longer expanding. Hooray! After 14 years of putting all the profits into making new factories, you can enjoy watching the money flow in.
Now suppose you were able to convince investors to give you $24M to build three more factories immediately, in exchange for some percentage of the business. You're immediately making $4M/year, minus whatever percentage goes to your investors. If the percentage that the investors get is low enough, this has a higher net present value to you than the slow-and-steady approach described in the previous paragraph.
Now what if investors aren't convinced enough to give you $24M, but they will give you enough ($8M) to make one factory? Well, you could open that factory, show investors that you're making double the profits now, and maybe that'll convince them to invest more now that your business has proven itself. There may even be multiple rounds of this. The rationale is the same: by expanding your business faster, you expand your revenue faster.