Thrive Capital believed to be leading new multibillion-dollar investment in Stripe

Mary Ann Azevedo@bayareawriter / 12:26 PM ESTJanuary 31, 2023

Image Credits: David Paul Morris / Bloomberg / Getty Images

Thrive Capital has reportedly committed $1 billion in fresh capital to payments giant Stripe as part of a new investment in the works that would value the fintech company at between $55 billion and $60 billion.

TechCrunch reported last week that Stripe was seeking to raise $2 billion but the number could actually be closer to $2.5 billion to $3 billion, according to reports from The New York Times and The Information. In an unusual twist, Stripe is believed to be raising new funds to, as The Information reported, "address the issue of expiring restricted stock units for some of its veteran employees—and a massive employee tax bill that will likely come with it."

Neither Stripe nor Thrive Capital commented on the rumors when contacted by TechCrunch.

Thrive Capital is believed to be leading the new investment in Stripe. The New York-based firm, started by Joshua Kushner, also led the company’s $70 million Series C in 2014 when it was valued at $3.5 billion.

By 2021, Stripe would go on to achieve the highest-ever valuation for a private company when it raised $600 million at a $95 billion valuation. But Stripe has not been immune to the global downturn: In November, it laid off 14% of its staff, or around 1,120 people. And the company has slashed its internal valuation more than once over the past year. Earlier this month, TechCrunch reported that Stripe had cut its internal valuation to $63 billion. That 11% cut came after a prior internal valuation cut that valued the company at $74 billion.

Last week, Stripe apparently told employees that it had set a 12-month deadline for itself to go public, either through a direct listing, or by pursuing a transaction on the private market, such as a fundraising event and a tender offer. But most industry observers believe that a fundraise scenario is a far more likely one for the company.

Fintech analyst Alex Johnson told TechCrunch that Stripe may be pushing for an exit because it’s potentially "been hanging on to some really talented early employees by promising them a big ‘exit’ on their equity."

He added: "My guess is that the market for Stripe secondaries has gone down quite a bit over the last year and those employees are feeling frustrated and putting pressure on Stripe’s management to make good."

What’s Stripe’s deal?

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The decline in e-commerce as the restrictions of the COVID-19 pandemic eased most certainly led to less revenue for Stripe. Stripe reportedly notched gross revenues of $12 billion and was EBITDA profitable in 2021, according to Forbes. The company’s products, in its own words, "power payments for online and in-person retailers, subscriptions businesses, software platforms and marketplaces, and everything in between."

In 2022, according to The Information, Stripe’s gross revenues totaled $14.2 billion.

The company has reportedly struggled in recent years in the face of increased competition. The Information also reported that Stripe has seen a number of initiatives not come to fruition as hoped. For example, according to that publication, the company last fall "scuttled a crucial project called Sonic, which was supposed to rewrite significant pieces of Stripe’s code in part to speed up transactions—an important step to reduce cloud computing costs and boost profit margins before a blockbuster public listing."

Indeed, as a business that has traditionally derived revenue from variable transaction volume, Stripe appears to be exploring ways to generate meaningful — and predictable — revenue. For example, Amazon announced on January 23 that it plans to "significantly expand" its use of Stripe. Reported Pymnts: "Under the new agreement, Stripe will become a strategic payments partner for Amazon in the U.S., Europe and Canada, processing a significant portion of Amazon’s total payments volume. Stripe will be used across Amazon’s business units, including Prime, Audible, Kindle, Amazon Pay, Buy With Prime and more." Also, TechCrunch recently reported on how new fintech startup Mayfair is paying Stripe a fee as part of its mission to offer businesses a higher yield on their cash.

Founded by Irish brothers John and Patrick Collison (the CEO), Stripe has raised more than $2.2 billion in funding since its 2010 inception from investors such as Allianz (via its Allianz X fund), Axa, Baillie Gifford, Fidelity Management & Research Company, Sequoia Capital, General Catalyst, Base Partners, GV and an investor from the founders’ home country, Ireland’s National Treasury Management Agency (NTMA).

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