Stripe, a San Francisco-based payments provider and one of the most valuable private companies in the world, said Wednesday that it had raised $50 billion worth of new funds, compared with $95 billion in 2021, a sign of how the air has blown out of startup deals.
The startup, which provides payment processing software to companies like Amazon, raised $6.5 billion for its new funding from investors including Andreessen Horowitz, Founders Fund and Thrive Capital. Stripe, which said it doesn’t need the money to run its business, plans to use the funding to help employees sell their shares in the company and cover taxes related to their stock compensation.
“Current and previous Stripes have helped build a foundational economic infrastructure for millions of companies around the world, and this transaction gives them the opportunity to access the value they helped create,” said John Collison, co-founder and President of Stripe.
Stripe’s valuation decline reflects a difficult time for startups. Over the past year, as interest rates and inflation rose and the global economy began to falter, seed funding fueled by low interest rates and easy money dwindled. Many young companies have implemented mass layoffs and reduced other costs. According to PitchBook, investment in US startups fell 31 percent last year to $238 billion.
Stripe has long been a darling of the startup industry. In 2021, it rose to a $95 billion valuation after new funding, making it the most valuable startup in the United States. But as conditions worsened last year, Stripe cut its internal valuation 28 percent to $74 billion and laid off 14 percent of its employees, or about 1,100 jobs. The company was exploring a possible IPO earlier this year.
Most recently, the startup ecosystem was further shaken by the collapse of Silicon Valley Bank, a key banking institution for venture capital firms and private companies. Federal regulators have taken over the bank, which has a new chief executive, Tim Mayopoulos, an attorney who has steered several banking and fintech companies through tough times.
“They needed cash at a bad time in the market,” Angela Lee, a professor of venture capital at Columbia Business School, said of Stripe. “Because they are so big, this will definitely change future ratings. If her rating can halve, so can everyone else.”
A Stripe spokesperson declined further comment.
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 some breathing room in a difficult public listing market and also helps retain employees. Many privately held tech companies use stock options to hire employees, but a quiet market for public offerings has made it difficult for employees to monetize those stocks. Some Stripe employees have stock grants that expire next year, and the new funding will help provide liquidity.