▲ 288 points
back
259 comments
Stripe missing the 2018-2021 tech IPO window is going to be seen as a historic business decision making failure. Everything was in their favor. They could have sleepwalked into a $120B+ market cap. All employees and investors could have had as much liquidity as they desired. But for whatever reason the founders stuck to their "we will stay private forever" stance, and the entire company is suffering because of it.
They could have hit $120B market cap at one point, but all public tech stocks are significantly down since then. For example, their closest competitor Adyen hit $31, but is now at $14. So with this logic, Stripe's valuation would be almost exactly where it currently is.
Yes, a lot of former employees could have become liquid. But a lot also would have had money tied up exactly the same way it is now, except on a much more volatile public market where their every move would be much more scrutinized.
They're now providing liquidity to employees via this fundraise, too, which solves the only major drawback I can see with not going public earlier.
An IPO during that time would certainly help stock holders get liquid but it wouldn't help the business given that Banks/Firms were making a killing on the IPOs of that era by disastrously mispricing the businesses. There's a lot of business that still needs to happen after an IPO and an IPO in and of itself is not the goal. If you're running a solid business like Stripe during turbulent times keeping your options open is a good idea. We haven't seen how the IPO fest of 2020-2021 is going to work out for some of those companies if they get cash strapped.
> Stripe does not need this capital to run its business.
Suffering? Raising $6.5b when you don’t need to, but because it helps your longest running employees, is suffering?
Was a great decision - should stay private forever.
You think the IPO window was “missed”, they aren’t short sighted about their company.
> the entire company is suffering because of it.
What are you proposing? That the company should have instead made a "predict the future" decisions optimized for short term gains?
probably not as bad as the wework botched ipo.... but your point remains
Exactly right. If it was an IPO, the $6.5B would go into Stripe's bank account to grow the business instead of buying out shares from employees who have to sell. And sure maybe they didn't need that money, but it could have helped acquire companies and grow more.
This deal is basically the preamble to a direct listing. Which again would not help Stripe raise funds but instead merry go round shareholders.
> They could have sleepwalked into a $120B+ market cap
payments market dramatically shifted with emergence of Device Pay (Google/Apple Pay), I think an IPO would've distracted them - staying private for now makes sense, they can focus on differentiating factors.
I don't agree at all.
The only 'suffering' going on here is issues with employee liquidity.
As long as the company can raise the money it needs on good terms, there's absolutely no reason otherwise to be a public company.
uh 2018-2020 was not a good window
it was pretty much very end of 2020 and early to mid 2021.
Valve and Ikea are doing great and I know of a bunch of companies that had successful IPOs that are now defunct.
Your comment is quite silly. No one can predict the future with certainty.
I think it’s more nuanced. The issue bigger than market cap is just being able to IPO at all and give your folks liquidity.
In fairness, who can time a market?
Or they dodged a bullet by not having their valuation artificially inflated by money printing?
Why is the entire company suffering? Do they need to raise funds?
This is not a clear-cut "hindsight is 20/20" case — what you are proposing is merely a hazy probability and not a "they could have done this to print money—it's equally likely if they IPO'ed that a downward trend and less value could have been the result.
I think we should accept that this is a good move and leave it at that. I remember a thread a few weeks back where we were criticizing stripe about the incoming deadline and how stripe would end up screwing early employees. Now they made the correct move and the conversation switches to “they should have exited earlier?”. This is an impossible crowd to please. Everyone makes mistakes and mistakes at that scale will always have gigantic implications. They resolved it.
I'm a bit cynical when I see stuff like this. Is it a way for the company to exit employee shareholders and put that equity into investor hands? Especially at a discount from peak?
That can be good for employees (money in your bank is a good thing), but only if they want to sell.
Edit: there's another thread with more info. This round looks to address a specific issue that would affect employees very negatively. So it seems like a good thing and not corp greed.
The company is 12 years old, the biggest player in their domain (online payments) and still needs that much funding? Where is it time to turn the knobs and start producing income?
Series I lol. I think the latest funding round I've seen prior to this is a Series G, but really anything past D/E seems rare.
Tender offers can be pretty tricky for employees to navigate
Put together a quick guide all about taxes/financial implications of participating in a tender offer: https://manual.withcompound.com/chapters/what-to-do-if-your-...
A 50% drop is a big oof moment for Stripe. But then again I don't think the company was every really worth +90b dollars.
If I were an employee I'd take the liquidity now before this goes the way of WeWork
48% discount from peak valuation (95 G$ in Mar 2021). Ouch.
> Stripe benefits from the early role it plays in technology waves that reverberate across the industry, like mobile marketplaces, SaaS, and now AI, with users like OpenAI, Anthropic, Midjourney, Copy.ai, CoreWeave, and a long list of others.
So does Starbucks, by selling coffee to those companies' employees.
> Stripe [] has signed agreements for a Series I fundraise of more than $6.5 billion (€6.15 billion) at a $50B (€47B) valuation. Primary investors include ...
> The funds raised will be used to provide liquidity to current and former employees and address employee withholding tax obligations related to equity awards, resulting in the retirement of Stripe shares that will offset the issuance of new shares to Series I investors. Stripe does not need this capital to run its business.
As I read this, the plan is to issue a number of shares, buy exactly that many shares from Stripe employees, and retire the purchased shares.
Why do it that way instead of allowing the employees to sell their shares into the Series I offering?
If I was an employee of such company, I would just sell all my equity as soon as I got it. I suspect they have no clue how insanely lucky they are and how many forces have worked in their favor behind the scenes to put them in such fortunate position. After such insane winning streaks, it's the less arrogant ones who understand their luck who get to keep the spoils.
So given Stripe’s record so far of never wanting to go public, what’s the incentive to buy into this funding round?
At this point, they might as well do a direct listing. Raising more money would just cut their valuation further and as soon as they list everyone can dump 20% of their holdings to provide liquidity.
But either way, they should have at least IPO'd in 2019, just like the rest of the companies out there who raced to the exit [0] [1] instead of a 50% valuation cut from $95BN.
Even in the best case of startup outcomes it still seems like they find a way to screw you over unless you have preferred shares. Sure there are the few lotteries that hit, but overall it isn’t a great deal. I wonder if we will see more startups just start to offer all cash.
Does this imply that Stripe thinks an IPO in this market would value them lower than $50B?
They definitely missed the opportunity of a lifetime, the numbers must have looked unusually poor to have not made the decision to IPO in 2021.
So even the peak bubble boys with a real company are down 50%? That means every other private mark down is 80-90%+…
Now you see why they panicked over SVB.
Will any of the funding go towards improving the customer experience? HN has been a Stripe support hotline the past few months.
Stock options are so fucked. I'll never go back to the startup world without actual compensation.
I'm not so sure about this, but can we really say that they're just trying to hype their upcoming IPO a bit more? Who knows though. Also, I am thinking they might be on the right path to further delay their IPO because of the current market condition.
There were a lot of offers to buy into this last funding round, and I gotta be honest the price point was not appealing.
Ah, financial gravity comes to unicorns.
20x EBITDA starts looking reasonable, instead of the previous 40x.
overrated company with bad foresight to read the trend. Maybe paystack is a terrible acquisition anyways.
What prevented an IPO?
The same Stripe we read complains and Tell HN stories every month ...
well on its way to a $15bln valuation, just a matter of time
Raising money now means they probably expect the financial industry to go further down.
Plan to provide employee liquidity? Is this just a euphemism for "paying them?"
Eek, why don't we fix AMT and stop treating employees so poorly? This whole scheme is utterly repellent to me and makes me feel incompetent to have to read and consume it. Why so many stratagems around something that is literally incompetent?
What's with all this talk of "employee liquids" and where can I purchase them?
Are they made of real employees?
How are these liquids rendered? Some kind of masher, or industrial grinder perhaps?
How is it determined which employees are rendered into liquid and which ones are not? A merit-based review, or perhaps a lottery system?
What are the uses and health benefits of consuming employee liquid? What does it taste like?