Stripe payment processors slashes valuation by almost half to $75b
A business that boasts clients including Amazon and Google and was the darling of the tech world has suffered a huge drop in its valuation.
It was once hailed as Silicon Valley’s most valuable start-up – worth a whopping $US95 billion ($A124 billion) – but payment giant Stripe has been forced to slash billions from its record valuation.
The company just raised $US6.5 billion ($9.7 billion) in funding at a $US50 billion ($A75 billion) valuation – a sharp discount from its record valuation back in 2021.
Its dramatic fall in fortune for the once darling of the tech world. In November last year it sacked 14 per cent of its workforce, impacting about 1120 staff, blaming stubborn inflation, energy shocks, higher interest rates, reduced investment budgets, and sparser start-up funding.
While it was one of the largest private stock sales in US history for the San Francisco- and Dublin-based group, given the tech wreck sweeping the sector it shows start-ups may have to accept big discounts in order to access funding.
But Stripe said it did not need the money to run the business and instead it would be directed towards current and former employees, the retirement of shares and tax obligations.
“Over the last 12 years, current and former Stripes have helped build foundational economic infrastructure for millions of businesses around the world, and this transaction gives them the opportunity to access the value they’ve helped create,” said John Collison, co-founder and president of Stripe.
“But the internet economy is still young, and the opportunities of the next 12 years will dwarf those of the recent past. There’s so much to discover and to create. For us, it’s now back to work.”
On Wednesday, it also announced it was partnering with OpenAI, the creator of chatbot ChatGPT, to integrate artificial intelligence into its payment processing.
“We’re excited to work with Stripe to monetise our flagship products,” said Peter Welinder, vice president of product and partnerships at OpenAI.
“Beyond payments, Stripe is helping us with everything from recurring billing and tax compliance to automating our financial operations.”
Last July, Stripe cut its internal valuation by 28 per cent from $US95 billion ($A124 billion) to $US74 billion ($A111 billion).
One hundred businesses now handle more than $US1 billion ($A1.5 billion) on Stripe every year, according to the company, which builds payment processing software for companies like Amazon, Google and Shopify.
Yet, some of its most well known clients such as electronic vehicle company Rivian, which has posted billions in losses, buy now pay later company Affirm – which quit the Australian market this month – and software company GitLab have been suffering during the tech downturn.
The deal comes the tech sector has also been rocked by the collapse of Silicon Valley Bank, which served as a banking partner for numerous start-ups and their venture backers, although Stripe said it was not exposed.
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