Stripe, a San Francisco payment provider and one of the world’s most valuable private companies, said on wednesday that it had raised new funding valuing it at $50 billion, down from $95 billion in 2021, in a sign of how the air of start-up deals has gone.
The start-up, which provides payment processing software to companies like Amazon, raised $6.5 billion in its new funding from investors including Andreessen Horowitz, Founders Fund and Thrive Capital. Stripe, who said he didn’t need the money to run his business, plans to use the funds to help employees sell their company shares and cover taxes related to their stock compensation.
“Current and former Stripes have helped build a critical economic infrastructure for millions of businesses around the world, and this transaction provides them with the opportunity to access the value they have helped create,” said John Collison, Stripe’s founder and chairman.
The drop in Stripe’s valuation reflects a difficult period for startups. Over the past year or so, as interest rates and inflation have risen and the global economy has begun to weaken, seed funding, which had been fueled by low interest rates and cheap money, has declined. Many young companies have carried out mass layoffs and cut other costs. Last year, investments in US startups fell 31 percent to $238 billion, according to PitchBook.
Stripe had long been a startup industry darling. In 2021, it rose to a valuation of $95 billion after new financing, making it the most valuable startup company in the United States. But as conditions deteriorated last year, Stripe cut its internal valuation 28 percent to $74 billion and laid off 14 percent of its employees, or about 1,100 jobs. The company explored a possible initial public offering of shares earlier this year.
More recently, the startup ecosystem has been further rocked by the failure of Silicon Valley Bank, a key banking institution for venture capital firms and private companies. Federal regulators have taken over the bank, which has a new chief executive, Tim Mayopoulos, a lawyer who has led several banking and fintech organizations through difficult times.
“They needed cash at a bad time in the market,” Angela Lee, a professor of venture capital at Columbia Business School, said of Stripe. “Because they’re so big, it’s definitely going to change future valuations. If your valuation can be halved, so can everyone else’s.”
A Stripe spokesperson declined to comment further.
Stripe was founded in 2010 by brothers John and Patrick Collison. It previously raised more than $2 billion from investors.
The new funding gives Stripe some breathing room in a tough market for public listings and also helps retain employees. Many private tech companies use stock options to hire workers, but a quiet public offering market has made it difficult for employees to retire those shares. Some Stripe employees have stock grants that will begin to mature next year, for which the new funding will help provide liquidity.
