Stripe's valuation surged to $65 billion in a deal that will allow employees to cash out their stock, the payments service provider said on Wednesday, potentially further delaying its much-awaited initial public offering (IPO).
Stripe said the majority of the funds for the deal are being provided by investors, but it will also use some of its own capital to repurchase shares of some current and former employees in the so-called "tender offer."
Sources have previously told Reuters that Stripe plans on eventually becoming a public company.
"It will definitely reduce the pressure to do IPO as soon as possible. Stripe (reportedly) turned profitable in 2023 and further 1-2 years of such traction would allow for a higher valuation at an IPO," said Alan Vaksman, founding partner at investment firm Launchbay Capital.
Stock-based payouts typically comprise a big chunk of the compensation for startup employees, who have no way of converting their shares into cash unless their employer files for an IPO or buys back their shares.
Startups can also enlist venture capital investors to buy existing shares held by their employees. Such deals can boost employee morale without diluting ownership.
Stripe did not disclose the names of the investors participating in the round. But the Wall Street Journal, which first reported the deal, said Sequoia Capital and Goldman Sachs's growth equity fund were involved.
Stripe declined to comment beyond its statement.
The company was valued at $50 billion in its last funding round in 2023 where it raised $6.5 billion. It had then said that it did not need the capital to run its business but would use it to cover a tax bill and to provide liquidity to employees.
At its peak, Stripe was valued at $95 billion in 2021.
