Stripe’s capital company has put off going public for so long that one of its leading investors, Sequoia Capital, is now attempting to give returns to its limited partners (LPs) creatively.
Sequoia’s Offer to LPs
According to Axios, the venture firm emailed LPs in funds raised between 2009 and 2011 with an offer to buy up to $861m of shares in Stripe. According to the email, the buyers would be other Sequoia funds.
Significance of the Move
This move is significant for two reasons: it shows that LPs are starving for liquidity amid this dry IPO market and that Sequoia is confident about Stripe’s future and its ability to exit in a way that will eventually make money.
Sequoia’s Confidence in Stripe
Sequoia wrote in the letter that they were still “highly optimistic about Stripe’s future” and believed it was “durable across economic cycles”.
Stripe’s Valuation History
In March 2021, Stripe was valued at $95bn, so there are potential gains if it goes public. By February 2023, reports said that the company had set itself a deadline of 12 months from then to mount an initial public offering (IPO) or otherwise pursue a transaction on the private market, such as a fundraising event plus tender offer—and look where we are now.
Recent Funding and Valuation Changes
Last summer, Stripe raised $6.5bn in Series I funding, valued at $50bn—a far cry from its peak valuation of $95bn. Then TechCrunch reported last month that it had inked deals with investors to provide liquidity to current and former employees through a tender offer at a $65bn valuation—closer but still far off.
Stripe’s Position Among Global Startups
But even at $65bn, Stripe remains one of the most valuable startups in the world—somewhere behind SpaceX ($100bn), TikTok owner Bytedance ($140bn), and Klarna ($155bn), but ahead of SpaceX rival Blue Origin ($60bn).
Sequoia’s Investment in Stripe
Sequoia has invested $517m in Stripe since 2011. The fintech’s most recent valuation was $70bn, and Sequoia’s entire stake is valued at $9.8bn. The company reportedly distributed $10bn to its investors last year.
Implications of Sequoia’s Tender Offer
But now that Stripe has made a big tender offer and Sequoia is trying to return cash to earlier funds, the fintech giant isn’t going public soon. And with Lixandru and Kelly on its board, this could indicate that they may be considering one of these alternative deals.
Potential Future for Stripe
There is a chance that Stripe will never make a public offering, although it faces increasing competition as time passes. During its 15 years of operation, the company has continued to grow at an impressive rate even though other payment processors have started to eat into its market share.
Stripe’s Recent Performance
In March, Stripe announced in an annual letter that it had surpassed $1 trillion in total payment volume for 2023, following a 25% increase from the previous year. The same document also mentioned being “cash flow positive throughout 2023 and expects to be again in 2024,” meaning that it does not need money urgently while looking for liquidity options for staff and VC holders.
