On February 24, we wrote about Stripe after the fintech giant announced it was close to raising $4 billion in new funding that will push the company's valuation to $55 billion, a huge discount from its previous valuation of $95 billion in 2021.
The 12 year-old Stripe announced Wednesday it raised $6.5 billion in a down round at a $50 billion valuation. The round was backed by primary investors - Andreessen Horowitz, Baillie Gifford, Founders Fund, General Catalyst, MSD Partners, and Thrive Capital, with participation from new investors including GIC, Goldman Sachs Asset and Wealth Management, and Temasek.
A down round is a situation in which a startup raises a new round of venture capital funding, but the pre-money valuation of the company is lower than the post-money valuation of the previous round. A down round is intended to help founders extend their fundraising efforts, and should not be confused with a bridge round.
A payment processor said in a press release that Stripe does not need this capital to run its business. The company plans to provide liquidity to current and former employees and address employee withholding tax obligations related to equity awards, which will result in the retirement of Stripe shares that will offset the issuance of new shares to Series I investors. Stripe was founded over a decade ago and has remained private despite speculation about an IPO. In January, CNBC reported that the company planned to make a decision on a public offering within the next year.
Over the last 12 years, current and former Stripes have helped build the foundational economic infrastructure for millions of businesses around the world, and this transaction gives them the opportunity to access the value they helped create, said John Collison, co-founder and president of Stripe. The opportunities of the next 12 years will surpass those of the recent past, and the internet economy is still young. There is so much to discover and create. It is now back to work for us. Stripe has not been immune to the global slowdown on the economic front. A year ago, Stripe became the most valuable U.S. startup with a valuation of $95 billion. According to The Wall Street Journal, the company lowered its internal valuation to $63 billion because of economic uncertainty. The 12 year-old enlisted the help of Goldman Sachs and JP Morgan to decide the best course of action for its public listing.
In November, Stripe laid off 14% of its staff because of rising inflation and fears of a looming recession. In a memo to staff, CEO Collison said the cuts were inevitable because rising inflation, higher interest rates, energy shocks, tighter investment budgets, and lack of funding forced the company to make a tough decision.
The software platform was launched in 2010 by two Irish brothers Patrick Collison and John Collison. It is a San Francisco-based platform that competes directly with PayPal, Adyen and Square. The company allows businesses to accept online payments. Today, Stripe is one of the most valuable fintech startups in the world. Patrick and John Collison, who are 32 and 30 respectively, are worth more than $11 billion.