Stripe Inc. is reportedly considering going public in what could be the biggest initial public offering of a tech startup in recent times.
The Wall Street Journal reports that co-founders Patrick and John Collison have told employees that the company has set a goal of going public or allowing employees to sell shares through a secondary offering within the next 12 months. The consideration is more than wishful thinking, with Stripe also said to have hired Goldman Sachs Group Inc. and JPMorgan Chase & Co. to advise on both options.
Founded in 2010, Stripe processes payments on the websites of its customers while also offering complementary services for e-commerce customers. Those services have expanded rapidly over the last few years, including the launch of chargeback protection, a cash advance service and a corporate credit card.
Stripe last raised venture capital funding of $600 million on a $95 billion valuation in March 2021, but heading into a potential IPO this year or early next year, the company would be worth significantly less. According to CNBC, Stripe cut its internal valuation to $74 billion in July, with subsequent reports claiming that the company cut its valuation further to $63 billion earlier this month.
That Stripe is considering allowing employees to sell shares on the secondary market as an alternative to a straight-up IPO reflects a broader problem in the market – IPOs have nearly completely dried up amid 40-year high inflation, high-interest rates and fears of a worldwide recession.
In its most recent report, PitchBook-NVCA Venture Monitor found that VC exits have slowed to a nearly complete halt. There were only 14 public listings in the fourth quarter and exit activity in 2022 came in at $71.4 billion, the first time the figure has dropped below $100 billion since 2016. The acquisition market has also rapidly slowed, dropping to $763 million last year, the first time the number has been below $1 billion in over a decade.
If Stripe is serious about going public, they will be hoping that at some point during the year, the broader macroeconomic outlook will shift and bull markets will return. While a crystal ball may be required to know where the world will be in the next year, only very committed optimists can see markets recovering to similar levels seen two or three years ago.
Noor Faraby, product marketing manager at Stripe spoke with theCUBE, SiliconANGLE Media’s livestreaming studio in November about how the company is moving beyond payments to help businesses generate insights from its rich data trove.
“We have expanded into so many different tools and technologies that are beyond payments,” Faraby said in the interview. “We like to think of ourselves now as more than just a payments company, rather as financial infrastructure for the internet.”
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