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Payments giant Stripe raises $6.5B at a $50B valuation

41 points by alihm 4y ago

theGnuMe 4y ago
Seems like a good deal for the employees if they can unload 100%.
- cwwc 4y ago
  Yep, kudos for the Kirkland team for structuring this way.
edwinwee 4y ago
(Dupe of https://stripe.com/newsroom/news/stripe-series-i-employee-liquidity https://stripe.com/newsroom/news/stripe-series-i-employee-li... https://news.ycombinator.com/item?id=35175063 https://news.ycombinator.com/item?id=35175063)
rvz 4y ago
Unsurprisingly and as expected. As I said before back in 2019 [0] and a year ago [1], the time to IPO was in 2019 and back then, Stripe had no plans to IPO and instead took a series of down-rounds from its high of $95BN, then $74BN [2], $63BN [3] and now $50BN. Oh dear. [0] https://news.ycombinator.com/item?id=20993919 https://news.ycombinator.com/item?id=20993919 [1] https://news.ycombinator.com/item?id=31062658 https://news.ycombinator.com/item?id=31062658 [2] https://www.wsj.com/articles/stripe-cuts-internal-valuation-by-28-11657815625 https://www.wsj.com/articles/stripe-cuts-internal-valuation-... [3] https://www.theinformation.com/articles/stripe-cuts-internal-valuation-by-11-implying-63-billion-valuation https://www.theinformation.com/articles/stripe-cuts-internal...
- senttoschool 4y ago
  Being public comes with an operating cost. You're now subject to many more regulations as a public company, which can be distracting to execution. That said, I think most Stripe investors and employees would have preferred to IPO in 2019, 2020, and 2021.
- sharkweek 4y ago
  I wont feign any deeper understanding here, but wouldn't it have been just as bad (and perhaps worse??) if they had been public over the last couple years? I.e., wouldn't the public market have shredded their stock apart even more if this is how even the private financial markets are handling their current positions/views of the business? I suppose if the goal was to create a big exciting exit event for employees and private shareholders a 2019 IPO would have been great, but I'm imagining a bunch of that wealth is wiped out by a downturn in public prices too.
  - deleted 4y ago
    [deleted]
  - eganist 4y ago
    > wouldn't it have been just as bad (and perhaps worse??) if they had been public over the last couple years? Bad for who? The original investors would've gotten their exit at a superlative valuation, and with any eventual downturn, Stripe would've gotten to buy their own shares back at a discount. The bagholders would've been institutional investors, so I guess bad for all of us by proxy (401ks etc) but they would've made out like bandits.
  - stanleydrew 4y ago
    Just as bad for whom? I think the big difference is that with a public market for their shares, Stripe itself probably wouldn't need to sell new shares in "down rounds." Yes the stock price would fluctuate on the secondary market and certainly would have dropped since 2021, but equity holders wouldn't be dependent on Stripe raising funds or organizing tender offers to sell.
illiarian 4y ago
Their net revenue is estimated at about 3.5-3 billion. Why in the seven hells would they need 6.5 billion on top of that? Are they building gold-plated toilets at their offices? Edit: I commented before reading: this is related to employees' stocks, taxes etc., and Strip says it's not needed to run the business itself.
- ctvo 4y ago
  > Why in the seven hells would they need 6.5 billion on top of that? Are they building gold-plated toilets at their offices? It’s worth reading the article before commenting: > All proceeds will be used to help Stripe employees cover tax obligations related to the pending expiration of restricted stock units, plus to fund a new stock tender offer for current and former employees.
ctvo 4y ago
> The stock tender is voluntary, with employees eligible to sell as few or as many vested shares as they want (i.e. zero-100%). 100% at any price is interesting let alone whatever they’re getting.
vosper 4y ago
> All proceeds will be used to help Stripe employees cover tax obligations related to the pending expiration of restricted stock units, plus to fund a new stock tender offer for current and former employees. > The stock tender is voluntary, with employees eligible to sell as few or as many vested shares as they want (i.e. zero-100%). This seems like they're doing their employees a solid here. But I have a stupid question: who's the buyer for the shares? I'm guessing it's Stripe, with the money they raised. Then where do the shares go - are they allocated to the investors who just funded this raise, or are they destroyed so that the value held by the remaining shareholders increases? Or do we just not know?
- stanleydrew 4y ago
  Presumably the new money is in exchange for some newly-created class of preferred shares. Stripe holds the cash until it repurchases common shares from employees or any other holders, and those shares would go back into the unallocated common stock pool I'd assume. So yes, I'd think the only way this works is for Stripe to be the purchaser.
DueDilligence 4y ago
[dead]
tschellenbach 4y ago
Higher than Adyen, seems too high perhaps? Probably some structure in this deal to enable the higher valuation
- nrmitchi 4y ago
  > Probably some structure in this deal to enable the higher valuation It's almost definitely a liquidation preference to ensure that these new investors are going to get their $6.5B out first in the event of any Stripe liquidity event, and it seems extremely unlikely that Stripe ends up exiting for less than $6.5B. All-in-all this investment seems like a pretty good way to guarantee that you won't lose money (aside from to inflation).
deleted 4y ago
[deleted]
amgreg 4y ago
A good way to de-risk yourself, so I’d probably take it. But in a private tender offer like this (as opposed to an IPO) the employees will likely pay ordinary income tax, regardless of how long they’ve held the shares, as it is difficult to argue the transaction is not compensatory.

41 points by alihm 4y ago

theGnuMe 4y ago

Seems like a good deal for the employees if they can unload 100%.

cwwc 4y ago
Yep, kudos for the Kirkland team for structuring this way.

edwinwee 4y ago

(Dupe of https://stripe.com/newsroom/news/stripe-series-i-employee-liquidity https://stripe.com/newsroom/news/stripe-series-i-employee-li... https://news.ycombinator.com/item?id=35175063 https://news.ycombinator.com/item?id=35175063)

rvz 4y ago

Unsurprisingly and as expected. As I said before back in 2019 [0] and a year ago [1], the time to IPO was in 2019 and back then, Stripe had no plans to IPO and instead took a series of down-rounds from its high of $95BN, then $74BN [2], $63BN [3] and now $50BN. Oh dear. [0] https://news.ycombinator.com/item?id=20993919 https://news.ycombinator.com/item?id=20993919 [1] https://news.ycombinator.com/item?id=31062658 https://news.ycombinator.com/item?id=31062658 [2] https://www.wsj.com/articles/stripe-cuts-internal-valuation-by-28-11657815625 https://www.wsj.com/articles/stripe-cuts-internal-valuation-... [3] https://www.theinformation.com/articles/stripe-cuts-internal-valuation-by-11-implying-63-billion-valuation https://www.theinformation.com/articles/stripe-cuts-internal...

senttoschool 4y ago
Being public comes with an operating cost. You're now subject to many more regulations as a public company, which can be distracting to execution. That said, I think most Stripe investors and employees would have preferred to IPO in 2019, 2020, and 2021.
sharkweek 4y ago
I wont feign any deeper understanding here, but wouldn't it have been just as bad (and perhaps worse??) if they had been public over the last couple years? I.e., wouldn't the public market have shredded their stock apart even more if this is how even the private financial markets are handling their current positions/views of the business? I suppose if the goal was to create a big exciting exit event for employees and private shareholders a 2019 IPO would have been great, but I'm imagining a bunch of that wealth is wiped out by a downturn in public prices too.
- deleted 4y ago
  [deleted]
- eganist 4y ago
  > wouldn't it have been just as bad (and perhaps worse??) if they had been public over the last couple years? Bad for who? The original investors would've gotten their exit at a superlative valuation, and with any eventual downturn, Stripe would've gotten to buy their own shares back at a discount. The bagholders would've been institutional investors, so I guess bad for all of us by proxy (401ks etc) but they would've made out like bandits.
- stanleydrew 4y ago
  Just as bad for whom? I think the big difference is that with a public market for their shares, Stripe itself probably wouldn't need to sell new shares in "down rounds." Yes the stock price would fluctuate on the secondary market and certainly would have dropped since 2021, but equity holders wouldn't be dependent on Stripe raising funds or organizing tender offers to sell.

illiarian 4y ago

Their net revenue is estimated at about 3.5-3 billion. Why in the seven hells would they need 6.5 billion on top of that? Are they building gold-plated toilets at their offices? Edit: I commented before reading: this is related to employees' stocks, taxes etc., and Strip says it's not needed to run the business itself.

ctvo 4y ago
> Why in the seven hells would they need 6.5 billion on top of that? Are they building gold-plated toilets at their offices? It’s worth reading the article before commenting: > All proceeds will be used to help Stripe employees cover tax obligations related to the pending expiration of restricted stock units, plus to fund a new stock tender offer for current and former employees.

ctvo 4y ago

> The stock tender is voluntary, with employees eligible to sell as few or as many vested shares as they want (i.e. zero-100%). 100% at any price is interesting let alone whatever they’re getting.

vosper 4y ago

> All proceeds will be used to help Stripe employees cover tax obligations related to the pending expiration of restricted stock units, plus to fund a new stock tender offer for current and former employees. > The stock tender is voluntary, with employees eligible to sell as few or as many vested shares as they want (i.e. zero-100%). This seems like they're doing their employees a solid here. But I have a stupid question: who's the buyer for the shares? I'm guessing it's Stripe, with the money they raised. Then where do the shares go - are they allocated to the investors who just funded this raise, or are they destroyed so that the value held by the remaining shareholders increases? Or do we just not know?

stanleydrew 4y ago
Presumably the new money is in exchange for some newly-created class of preferred shares. Stripe holds the cash until it repurchases common shares from employees or any other holders, and those shares would go back into the unallocated common stock pool I'd assume. So yes, I'd think the only way this works is for Stripe to be the purchaser.

DueDilligence 4y ago

[dead]

tschellenbach 4y ago

Higher than Adyen, seems too high perhaps? Probably some structure in this deal to enable the higher valuation

nrmitchi 4y ago
> Probably some structure in this deal to enable the higher valuation It's almost definitely a liquidation preference to ensure that these new investors are going to get their $6.5B out first in the event of any Stripe liquidity event, and it seems extremely unlikely that Stripe ends up exiting for less than $6.5B. All-in-all this investment seems like a pretty good way to guarantee that you won't lose money (aside from to inflation).

deleted 4y ago

[deleted]

amgreg 4y ago

A good way to de-risk yourself, so I’d probably take it. But in a private tender offer like this (as opposed to an IPO) the employees will likely pay ordinary income tax, regardless of how long they’ve held the shares, as it is difficult to argue the transaction is not compensatory.