In a significant move within the fintech industry, major payment processor Stripe may soon allow early investors to cash out through a deal with venture capital fund Sequoia Capital, according to Axios. The potential transaction is said to value Stripe at $70 billion, a figure lower than its peak $95 billion valuation in 2021 but considerably higher than the $50 billion valuation it received during a recent fundraising round last year.
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The onset of the COVID-19 pandemic brought a surge of optimism for e-commerce businesses like Stripe as consumers increasingly shifted to online shopping. Stripe, which supports the back-end operations of numerous e-commerce companies, anticipated benefiting from this trend and expanded accordingly. However, the high expectations were tempered by rising inflation, elevated interest rates, and new geopolitical issues, including the ongoing conflict in Ukraine, making it challenging for growth-driven private companies to secure funding.
In a 2022 memo announcing layoffs affecting 14% of Stripe’s workforce, co-founders Patrick and John Collison reflected on the changes brought by the pandemic: “At the outset of the pandemic in 2020, the world rotated overnight towards ecommerce. We witnessed significantly higher growth rates over the course of 2020 and 2021 compared to what we had seen previously. As an organization, we transitioned into a new operating mode and both our revenue and payment volume have since grown more than 3x…The world is now shifting again. We are facing stubborn inflation, energy shocks, higher interest rates, reduced investment budgets, and sparser startup funding.”
The reported offer from longtime Stripe backer Sequoia Capital is aimed at investors who contributed to fundraising efforts between 2009 and 2012. As of now, neither Stripe nor Sequoia has publicly commented on the potential deal.