April 24, 2024

Stripe is a San Francisco payment provider and one of the most valuable private companies in the world, wednesday said It raised fresh money, bringing its valuation down to $50 billion from $95 billion in 2021, suggesting the atmosphere for startup deals has dissipated.

The startup, which provides payment processing software for companies including Amazon, has raised $6.5 billion in new funding from investors including Andreessen Horowitz, Founders Fund and Thrive Capital. Stripe says it doesn’t need the money to run its business, and it plans to use the funds to help employees sell company stock and pay taxes related to stock compensation.

“Stripes, current and former, have helped millions of businesses around the world build fundamental economic infrastructure, and this transaction gives them the opportunity to capture the value they helped create,” said Stripe founder and president John Collison.

The drop in Stripe’s valuation reflects tough times for startups. Over the past year or so, as interest rates and inflation have risen and the global economy has started to weaken, the start-up capital provided by low interest rates and cheap money has dwindled. Many young companies have made massive layoffs and cut other costs. Investments in U.S. startups fell 31 percent to $238 billion last year, according to PitchBook.

Stripe has long been a darling of the startup industry. In 2021, after securing new funding, its valuation soared to $95 billion, making it the most valuable start-up in the US. But as conditions worsened last year, Stripe lowered its internal valuation by 28% to $74 billion and laid off 14% of its workforce, or about 1,100 jobs. The company explored a potential initial public offering of shares earlier this year.

More recently, the startup ecosystem has been further turbulent by the collapse of Silicon Valley Bank, the leading banking institution for venture capital firms and private companies. Federal regulators took over the bank, which named a new chief executive, Tim Mayopoulos, a lawyer who has steered banks and fintechs through tough times.

“They need cash in a bad market,” Angela Lee, a venture capital professor at Columbia Business School, said of Stripe. “Because they’re so big, it’s going to affect valuations going forward. If their valuations can be halved, so can everyone else.”

A Stripe spokesman declined to comment further.

Stripe was founded in 2010 by brothers John and Patrick Collison. It previously raised more than $2 billion from investors.

The new funding gives Stripe breathing room in a tough going-to-market and also helps it retain employees. Many private tech companies use stock options to hire employees, but a quiet public offering market makes it difficult for employees to cash out those shares. The new funds will help provide liquidity to stock grants held by some Stripe employees that are set to expire next year.

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