SAN FRANCISCO - Payments giant Stripe, one of the world’s most valuable private companies, said on Wednesday that it had raised new funding that values it at US$50 billion (S$67.4 billion), down from US$95 billion in 2021, in a sign of how the air has come out of start-up deal-making.
The start-up, which provides payment processing software to companies including Amazon, raised US$6.5 billion (S$8.8 billion) in financing from investors including Andreessen Horowitz, Founders Fund and Thrive Capital.
Other new investors include Singapore’s Temasek and sovereign wealth fund GIC, as well as Goldman Sachs Asset and Wealth Management.
Stripe, which said it did not need the fresh funds to run its business, plans to use the money to help staff sell their company shares and cover the taxes related to their stock compensation.
The fall in Stripe’s valuation reflects a difficult period for start-ups. Over the past year or so, as interest rates and inflation rose and the global economy began to soften, start-up funding – which had been fed by low interest rates and cheap money – declined.
Many young companies have conducted mass layoffs and cut other costs.
In 2022, investments in US start-ups dropped 31 per cent to US$238 billion, according to PitchBook.
Stripe had long been a darling of the start-up industry.
In 2021, it surged to a US$95 billion valuation after new funding, making it the most valuable start-up in the United States.
But as conditions deteriorated in 2022, Stripe lowered its internal valuation by 28 per cent to US$74 billion and laid off 14 per cent of its employees, or about 1,100 jobs.
The company explored a potential initial public offering of stock earlier in 2023.
Most recently, the start-up ecosystem has been rattled further by the failure of Silicon Valley Bank, a key banking institution for venture capital firms and privately held companies.
US federal regulators have taken over the bank, which has a new chief executive, Mr Tim Mayopoulos, a lawyer who has steered several banking and financial technology organisations through tough times.
“They needed cash at a bad time in the market,” Columbia Business School venture capital professor Angela Lee said of Stripe. “Because they’re so big, it’s definitely going to move future valuations. If their valuation can halve, then so can everyone else’s.”
Stripe was founded in 2010 by brothers John and Patrick Collison.
It previously raised more than US$2 billion from investors.
The new funding gives Stripe breathing room amid a tough market for public listings, and also helps retain employees.
Many privately held tech companies use stock options to recruit workers, but a quiet public offerings market has made it difficult for employees to cash out of those shares.
Some Stripe employees have stock grants that will start expiring in 2024, for which the new funding will help provide liquidity. NYTIMES