Stripe Valuation Falls by $45b after $6.5b Funding Round

by Damian Chmiel
  • The company's valuation was cut for a third time due to the tech stocks rout.
  • Stripe "does not need this capital to run a business." It will provide liquidity to employees.
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Stripe, one of the prominent financial infrastructure platforms, has announced that it has raised more than $6.5 billion in a Series I funding round at a valuation of $50 billion. It is a sharp discount compared to the previous fundraising from March 2021, when the company was valued at $95 billion.

Stripe Raises Funds but Slashes Valuation

The funds raised will be used to provide liquidity to current and former employees and address employee withholding tax obligations related to equity awards, resulting in the retirement of Stripe shares that will offset the issuance of new shares to Series I investors. Stripe does not need this capital to run its business.

According to the press release from Thursday, the round was led by existing investors, including Andreessen Horowitz, Baillie Gifford, Founders Fund, General Catalyst, MSD Partners, and Thrive Capital. New investors include GIC, Goldman Sachs Asset and Wealth Management, and Temasek.

"Over the last 12 years, current and former Stripes have helped build foundational economic infrastructure for millions of businesses around the world, and this transaction gives them the opportunity to access the value they've helped create," John Collison, the Co-Founder and President of Stripe, commented.

With the advent of digitalization, Stripe has seen a significant surge in its enterprise user base since 2019, with some of the world's largest companies, such as Amazon, Ford, Salesforce, BMW, and Maersk, relying on its services.

Furthermore, Stripe has maintained its strong momentum with startups as more founders are embarking on entrepreneurial ventures, leading to a 155% rise in incorporations recorded by Stripe Atlas between 2019 and 2022. The company's success can be attributed to its proactive involvement in emerging technology, such as AI, which has earned it a reputable clientele, including OpenAI, Anthropic, Midjourney, Copy.ai, CoreWeave, and several others.

"The internet economy is still young, and the opportunities of the next 12 years will dwarf those of the recent past. There's so much to discover and to create. For us, it's now back to work."

Stripe has achieved a significant milestone as it now serves over 100 businesses that process more than $1 billion annually. 75% of these top global enterprises leverage Stripe for more than just payment processing. In addition, over 70% of these businesses utilize Stripe to manage their operations across multiple countries, highlighting the platform's capabilities beyond payment processing.

Stripe's Valuation Fell amid Tech Stocks Rout

The latest financing round valued the company at almost half its value than what it was two years ago. Stripe first cut its internal valuation by 28% in July, from $95 billion to $74 billion. Then in January, it was reported that the valuation had been reduced again to $63 billion.

The reduction reflected the significant decline in technology stocks over the past year. For the tech-rich Nasdaq 100 index, it was the worst year since 2008 and ended with a loss of more than 30%.

What is more, Stripe laid off 14% of its employees in November 2022. Management cited an incorrect assessment of the company's future growth prospects as the main reason.

This does not change the fact that Stripe has established several essential partnerships over the course of 2022, including Revolut. The fintech firm leverages Stripe's infrastructure to enter several new markets.

Stripe, one of the prominent financial infrastructure platforms, has announced that it has raised more than $6.5 billion in a Series I funding round at a valuation of $50 billion. It is a sharp discount compared to the previous fundraising from March 2021, when the company was valued at $95 billion.

Stripe Raises Funds but Slashes Valuation

The funds raised will be used to provide liquidity to current and former employees and address employee withholding tax obligations related to equity awards, resulting in the retirement of Stripe shares that will offset the issuance of new shares to Series I investors. Stripe does not need this capital to run its business.

According to the press release from Thursday, the round was led by existing investors, including Andreessen Horowitz, Baillie Gifford, Founders Fund, General Catalyst, MSD Partners, and Thrive Capital. New investors include GIC, Goldman Sachs Asset and Wealth Management, and Temasek.

"Over the last 12 years, current and former Stripes have helped build foundational economic infrastructure for millions of businesses around the world, and this transaction gives them the opportunity to access the value they've helped create," John Collison, the Co-Founder and President of Stripe, commented.

With the advent of digitalization, Stripe has seen a significant surge in its enterprise user base since 2019, with some of the world's largest companies, such as Amazon, Ford, Salesforce, BMW, and Maersk, relying on its services.

Furthermore, Stripe has maintained its strong momentum with startups as more founders are embarking on entrepreneurial ventures, leading to a 155% rise in incorporations recorded by Stripe Atlas between 2019 and 2022. The company's success can be attributed to its proactive involvement in emerging technology, such as AI, which has earned it a reputable clientele, including OpenAI, Anthropic, Midjourney, Copy.ai, CoreWeave, and several others.

"The internet economy is still young, and the opportunities of the next 12 years will dwarf those of the recent past. There's so much to discover and to create. For us, it's now back to work."

Stripe has achieved a significant milestone as it now serves over 100 businesses that process more than $1 billion annually. 75% of these top global enterprises leverage Stripe for more than just payment processing. In addition, over 70% of these businesses utilize Stripe to manage their operations across multiple countries, highlighting the platform's capabilities beyond payment processing.

Stripe's Valuation Fell amid Tech Stocks Rout

The latest financing round valued the company at almost half its value than what it was two years ago. Stripe first cut its internal valuation by 28% in July, from $95 billion to $74 billion. Then in January, it was reported that the valuation had been reduced again to $63 billion.

The reduction reflected the significant decline in technology stocks over the past year. For the tech-rich Nasdaq 100 index, it was the worst year since 2008 and ended with a loss of more than 30%.

What is more, Stripe laid off 14% of its employees in November 2022. Management cited an incorrect assessment of the company's future growth prospects as the main reason.

This does not change the fact that Stripe has established several essential partnerships over the course of 2022, including Revolut. The fintech firm leverages Stripe's infrastructure to enter several new markets.

About the Author: Damian Chmiel
Damian Chmiel
  • 1460 Articles
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About the Author: Damian Chmiel
Damian's adventure with financial markets began at the Cracow University of Economics, where he obtained his MA in finance and accounting. Starting from the retail trader perspective, he collaborated with brokerage houses and financial portals in Poland as an independent editor and content manager. His adventure with Finance Magnates began in 2016, where he is working as a business intelligence analyst.
  • 1460 Articles
  • 29 Followers

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