Stripe’s Employees Liquidity Headache

Stripe provides the infrastructure for merchants to accept all major forms of digital payments online as well as POS payment solutions. Stripe’s comprehensive product suite and impressive list of customers on the back of a secular boom in online and mobile commerce have placed the startup as one of the Silicon Valley’s most valuable, with a last round (March 2021) valuation of $95B. More recently in December 2022, Equiam fund sold its  $1.0B stake in the startup at a $152B valuation.

Founded in 2010, Stripe has raised more than $2.2B in VC money, from heavy weights such as Sequoia, Andreessen Horowitz, General Catalyst, GV, Kleiner Perkins, Khosla, among others. Stripe reached revenues of $14.4B in 2022– to put it into perspective, the combined revenues of the three largest Brazilian “sort of comparables”, Cielo, PagSeguro and Stone, was less than half. However, revenues growth has slowed considerably in 2022: 20% vs. 60% in 2021.

In the news this week was that Stripe is considering going public (through direct listing, since there is no need for additional capital) or a private-market transaction over this year.

According to The Information “The potential maneuvers are aimed at resolving a lingering problem for Stripe: Some of its veteran employees hold restricted stock units due to expire soon, meaning a big piece of their compensation could evaporate without maneuvers from the company”.

In summary: Stripe’s main new financing driver is to give employees liquidity.

Conclusion

Rising interest rates made tech stocks valuations decline and caused many startups to postpone their plans to go public.

Stripe is not alone; so, in the meanwhile (until the reopening of the IPO window), many other startups are also looking for ways to give liquidity to their high-performance employees (the scarcest resource in Silicon Valley) and keep them motivated.

Rumors are that, in order to solve its employees’ stock squeeze, Stripe has approached new investors (Berkshire included) offering a 30-35% discount over the last round.

Case in point, Fabrica Ventures Fund II timing couldn’t be better, our fresh raised dry powder should allow us to invest in great startups at great prices.