Stripe will enable companies to pay users in cryptocurrency through its platform

Stripe raises $6.5B on $50B valuation to address employee tax obligations

Posted on

Payment technology company Stripe Inc. today announced that it had raised an additional $6.5 billion in funding on a $50 billion valuation to provide liquidity to current and former employees to address tax obligations related to equity awards.

New and existing investors participated in the Series I round, including Andreessen Horowitz LLC, Baillie Gifford & Co., Founders Fund Management LLC, General Catalyst Group VI L.P., MSD Partners L.P., Thrive Capital Management LLC, GIC Pvt. Ltd., Goldman Sachs Asset Management L.P. and Temasek Holdings Pvt. Ltd.

Typically when a tech company raises new funding, it goes towards product development and increasing its headcount, but Stripe’s surprise very-late-stage raise was all about giving its current and former employees liquidity.

Stripe was rumored in January to be considering going public in what could have been one of the biggest initial public offerings of a tech startup in recent times. Going public would have allowed its employees to eventually offload some or all of their shares.

However, through February and into March, markets have continued to deteriorate, inflation remains at 40-year highs and most recently, banks, including Silicon Valley Bank, have collapsed. Put simply, this is not a good time to go public and with no end in sight to the current turmoil, Stripe raised funding instead.

All the funds from the raise will be used to provide liquidity to address the withholding tax obligations of employees related to equity awards, resulting in the retirement of Stripe shares that will offset the issuance of new shares to Series I investors. The company makes a particular note that it “does not need this capital to run the business.”

“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, cofounder and president of Stripe, said in a statement. “But 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.”

The company didn’t comment on any future plans to go public, but with the raise and ongoing market issues, that day may be a long while off.

The other stand out from the raise was its valuation, which reflects market realities. Stripe last raised funding of $600 million in March 2021 on a valuation of $95 billion. Two years later, at least on paper, the company is now valued at $50 billion. It’s a significant drop but not unsurprising, as many tech companies have seen similar and often bigger drops in value over the last 12 months.

Stripe did go out of its way to emphasize that its fundamentals are sound, listing some of its largest customers, including Inc., Ford Motor Co., Inc., BMW and Maersk. A/S. Stripe also mentioned some of its recent customers, including OpenAI LP, Anthropic Technology Ltd., Midjourney Partners LP, Inc. and CoreWeave Inc.

With generative artificial intelligence perhaps the only really hot sector in tech at the moment, Stripe is also getting a slice of the action through its payment services. Stripe has a technology partnership with OpenAI that includes the provision of payment services for ChatGPT and DALL-E.

Image: Stripe

Show your support for our mission by joining our Cube Club and Cube Event Community of experts. Join the community that includes Amazon Web Services and CEO Andy Jassy, Dell Technologies founder and CEO Michael Dell, Intel CEO Pat Gelsinger and many more luminaries and experts.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *