Payments titan Stripe is a highly regarded and respected company in the venture community. And while payment providers are reportedly in talks to raise new funding at heavily discounted prices from previous valuations, some VCs have set a good example for companies in a turbulent market: I’m looking at a potential down round.
Stripe is reportedly in talks to raise up to $3 billion at a valuation of $55 billion to $60 billion. That’s a lot in the current environment, but it’s a significant drop from the company’s previous valuation of $95 billion in early 2021.The company told employees late last week that it would either go public or make a deal to allow employees to sell its shares within the next 12 months (a potential funding round, according to a report Monday). does not rule out an IPO entirely. Stripe declined to comment. luck. of wall street journal first reported that the company is looking to boost its valuation by up to $60 billion. Importantly, Stripe has cut its valuation internally, so it’s already valued at around $60 billion at its 409a valuation.
But according to Brian Ascher, a partner at VC firm Venrock, a possible down round could be “a healthy boon and a good lesson” for companies.Or at least… you aren’t worth it today,” he said. luck“It is a reality to be willing to accept money at a low price, and it is better to have a low price and clean than risk increasing the risk by doing unnatural acts to maintain a reputation by having all sorts of structures and conditions. They should be very fond of making deals, and when things go wrong they tend to bite you at just the wrong time.”
Stripe’s potential funding is reportedly not to fund the company’s operations, but to cover taxes related to some longtime employee stock grants that expire next year. It is expected to be used for luck Late last week, if Stripe does go private-market, it’s likely that there will be VC funding and a tender offer (allowing insiders to sell their shares), and instead of an IPO, a private fundraising. said it would be done. Joshua Kushner’s Thrive Capital is leading a potential new round. new york timesdonating $1 billion.
Even with Stripe raising a valuation of around $60 billion, the drop is “much less than most public tech companies in the past year, so there’s absolutely nothing to worry about,” Venrock’s Ascher added. I was. he said: [versus] If these employees’ shares were instead traded on the secondary market, where they were bought by dozens or hundreds of random buyers.”
The company reportedly doesn’t need to raise capital, but revenue growth has reportedly slowed significantly while the company was unprofitable in 2022. VCs like Ascher, for example, don’t think there’s anything to worry about from an investor’s perspective. He said these investors saw his Stripe performance and would believe that Stripe would be able to execute on its plans without additional cash, but conversely, they would see an “untimely” large sum of money. tax bills will be difficult to cover without disrupting operations.
Meanwhile, since many of these companies, including Stripe, last raised funding, the landscape for fintech startups has changed dramatically, whether they are as highly regarded and valued as Stripe.
Bain Capital Ventures partner Sarah Hinkfuss said: [true] About earnings forecasts for listed companies in fintech and all sectors. ”
In other words, for Down Round, “In this day and age, it’s more mathematical and less emotional.”
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