Adam Hardej

Mar 09, 2023·Newsletter

Stripe Goes Private

Stripe Goes Private

Eric Newcomer reported yesterday that Stripe is approaching a close on their $6B raise at a $50B valuation. This round will include fancy names like Thrive Capital, General Catalyst, Andreessen Horowitz, and Founders Fund who are upping their positions. Goldman Sachs is also helping with the round by slinging it to their private wealth clients.

Stripe declined to comment, but it is widely known that they are not raising to grow. Rather, they're paying a $3.5B tax bill and using the extra cash to allow employees to get some liquidity.

This will be one of the biggest "venture" rounds ever. I put "venture" in quotes because it's hard to understand how much "venturing" is really going to happen here. When do we stop calling these "venture" rounds? Looks more like an IPO minus the public part. An Initial Private Offering.

Unlike a typical venture check that would aim for potential 10x returns, investors are aiming at closer to 2x to 3x for it to be worth their while. For funds like Thrive and GC who are already on the cap-table in a significant way this is likely about protecting the asset more than anything.

Reminds me of the famous Jean Paul Getty quote: "If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the bank's problem."

Great energy from Getty and it looks like the Collisons may have had these VCs in a similar situation. Raising a down round off a high of $95B is not your typical round in any way.

The Collisons have been local heroes in Silicon Valley for over a decade. They're both multi-billionaires and I would be my limited life savings that they have considerable liquidity. The power dynamics in these investor meetings are way outside the bell curve.

Interesting stuff all around and I think in a lot of ways it breaks new ground for private markets.

Some commentary on how I view the round and what I think it means for startups at large:

This isn't a hot round. It's a massive round. But it's not hot. Meaning people aren't fighting to get into it. Which is pretty unusual as far as massive rounds go and feels a lot more grown up than your typical "hypey" growth round.

Judging by rumors as well as the fact that there's a banker involved this has been a struggle. However, I do think it shows some maturity for private markets. It's not all or nothing and everything has a price. They needed cash so they went out to raise. The initial price was too high. They dropped it. They got it done.

For startups more broadly - is going public ever going to be the goal again? Not so long ago that was the dream: Startup. Cash in. Sell out (IPO). Bro (or Bra) down.

This is another step towards the lines between private and public markets blurring. Not in name or regulation, but in essence. If you don't need to go public to raise $6B, when do you need to go public?

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