A significant development in the fintech sector might soon see early investors cashing out. According to Axios, Stripe, a major payment processor, is planning a deal that allows investors who bought into the company 15 years ago to sell their shares to venture capital firm Sequoia Capital. This deal values Stripe at $70 billion, which, although lower than its $95 billion valuation in 2021, is significantly higher than the $50 billion valuation during last year’s fundraising round.
The initial years of the COVID-19 pandemic generated substantial optimism for e-commerce companies, including Stripe, as home-bound consumers increased their online shopping. Stripe, which provides backend services to many e-commerce businesses, scaled up its operations accordingly. However, the enthusiasm waned as inflation, high interest rates, and geopolitical challenges like the war in Ukraine, made it difficult for growth-oriented private companies to secure funding.
“In 2020, the world shifted quickly towards ecommerce,” wrote co-founders Patrick and John Collison in a 2022 memo that announced a 14% reduction in the company’s workforce. “We saw significantly higher growth rates in 2020 and 2021 compared to previous years. Our revenue and payment volume have since tripled… The world is now changing again. We are contending with persistent inflation, energy disruptions, higher interest rates, reduced investment budgets, and less available startup funding.”
The potential offer from Sequoia, a longstanding supporter of Stripe, would be aimed at investors who participated in funding rounds between 2009 and 2012. Neither Stripe nor Sequoia have made any public statements regarding the deal.