Stripe, a payments start-up that has been one of the most valuable private technology companies in Silicon Valley, has slashed its internal valuation by 28 percent, according to a person with knowledge of the situation, another sign of how the fluctuating stock market and economic uncertainty hit. private companies.
Investors had valued Stripe at $95 billion last year. The new internal share price, which does not affect the value of shares owned by outside investors, puts it at $74 billion, said the person, speaking on condition of anonymity because the information was private.
The Wall Street Journal first reported on the news that Stripe lowered its internal valuation.
Shares of tech companies like Meta, Netflix and Coinbase began to tumble this spring as rising inflation and interest rates created uncertainty about their ability to continue growing as fast as they have been. The sell-off has prompted private start-ups to evaluate whether their rising valuations from the past two years will hold up. Instacart, the grocery delivery start-up, cut its internal valuation 38 percent from $39 billion to $24 billion in March.
In recent months, venture capital investors have warned of a coming recession and preached caution, urging companies to cut costs and freeze hiring. Funding for start-ups in the United States has fallen 23 percent in the past three months from a year ago, the biggest drop since 2019, according to PitchBook, which tracks startups. Nearly 350 tech startups around the world have laid off 53,000 workers this year, according to Layoffs.fyi, which tracks startup layoffs.
Some start-ups are forced to raise capital at lower valuations. This week Klarna Bank, a “buy now, pay later” payment start-up based in Sweden, announced it raised capital in a financing round that valued it at $6.7 billion. Investors had estimated it at $45 billion last June.
Other start-ups preemptively lower their valuations as a way to attract employees. Start-ups compensate their employees with shares that promise to be valuable in an IPO or takeover. But it’s a less attractive offer if applicants think equity is overvalued.
Stripe was founded in 2010 by entrepreneurs and brothers John and Patrick Collison. The software allows businesses to process payments online. The company started selling to small start-ups and expanded into larger companies, reportedly reported net sales of $2.5 billion last year, according to Forbes. It employs more than 8,000 people, according to PitchBook.
The company has been mentioned for years as a candidate to go public. But the market for IPOs has been disastrous this year. In the first six months of this year, startup sales and public debuts fell 88 percent to $49 billion compared to the same period last year.
