Thrive Capital has reportedly committed $1 billion in fresh capital to payment giant Stripe as part of a new investment in the works that would value the fintech company between $55 billion and $60 billion.
TechCrunch reported last week that Stripe was looking to raise $2 billion, but the number might actually be closer to $2.5 billion to $3 billion, according to reports from the New York Times Y Information. In an unusual twist, Stripe is believed to be raising new funds to, as The Information reported, “address the issue of expiring restricted stock units for some of its veteran employees, and a massive employee tax bill that will likely come with that”.
Neither Stripe nor Thrive Capital commented on the rumors when contacted by TechCrunch.
Thrive Capital is believed to lead the new investment in Stripe. The New York-based firm, started by Joshua Kushner, also led the company’s $70 million Series C in 2014 when it was valued at $3.5 billion.
By 2021, Stripe would reach the highest valuation ever for a private company when raised $600 million at a valuation of $95 billion. But Stripe hasn’t been immune to the global recession: In November, fired 14% of its staff, or about 1,120 people. And the company has cut its internal valuation more than once in the past year. Earlier this month, TechCrunch reported that Stripe had Cut your internal rating to $63 billion. That 11% cut came after a previous internal valuation. cut that He valued the company at $74 billion.
Last week, Stripe apparently told employees that it had establish a term of 12 months to go public, either through a direct listing or by conducting a private market transaction, such as a fundraising event and public offering. But most industry observers believe that a fundraising scenario is a much more likely one to the company.
Fintech analyst Alex Johnson told TechCrunch that Stripe may be pushing for an exit because it potentially “has latched on to some really talented early hires by promising them a big ‘exit’ of their capital.”
He added: “I guess Stripe’s ancillary market has gone down quite a bit over the last year and those employees are getting frustrated and putting pressure on Stripe management to do the right thing.”
The decline in e-commerce as restrictions from the COVID-19 pandemic eased no doubt generated less revenue for Stripe. Stripe reportedly had gross revenue of $12 billion and was profitable on EBITDA in 2021, according to Forbes. The company’s products, in its own words, “power payments for online and in-person retailers, subscription companies, software platforms and marketplaces, and everything in between.”
In 2022, according to The Information, Stripe grossed $14.2 billion.
The company has reportedly struggled in recent years in the face of increased competition. The Information also reported that Stripe has seen a number of initiatives that didn’t come to fruition as expected. For example, according to that publication, the company last fall “scuttled a crucial project called Sonic, which was supposed to rewrite significant chunks of Stripe’s code in part to speed up transactions, an important step to lower cloud computing costs and boost profit margins ahead of a highly successful public listing”.
In fact, as a company that has traditionally earned revenue from variable transaction volume, Stripe seems to be exploring ways to generate significant and predictable revenue. For example, Amazon announced on January 23 that it plans to “significantly expand” the use of Stripe. Reported pymnts: “Under the new agreement, Stripe will become a payment partner for Amazon in the US, Europe and Canada, processing a significant portion of Amazon’s total payment volume. Stripe will be used across all of Amazon’s business units, including Prime, Audible, Kindle, Amazon Pay, Buy With Prime, and more.” Additionally, TechCrunch recently reported on how fintech startup Mayfair you are paying a fee to Stripe as part of its mission to offer businesses a higher return on their cash.
Founded by Irish brothers John and his brother Patrick Collison (CEO), Stripe has raised more than $2.2 billion in funding since its inception in 2010 from investors including Allianz (through its Allianz X fund), Axa, Baillie Gifford, Fidelity Management & Research Company, Sequoia Capital, General Catalyst, Base Partners, GV and an investor from the founders’ home country, the National Treasury Management Agency of Ireland (NTMA).
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