Stripe, a payments startup that has been one of Silicon Valley’s most valuable private tech companies, has slashed its internal valuation by 28 percent, according to a person with knowledge of the situation, in another sign of how the fluctuating market securities and economic uncertainty is affecting private companies.
Investors had valued Stripe at $95 billion last year. The new internal share price, which does not affect the value of shares owned by outside investors, puts it at $74 billion, said the person, who spoke on condition of anonymity because the information was private.
The Wall Street Journal first reported on the news that Stripe lowered its internal rating.
Shares of tech companies like Meta, Netflix and Coinbase began to slide this spring as rising inflation and interest rates created uncertainty about their ability to continue to grow as fast as they have. The sell-off has prompted private startups to assess whether their soaring valuations over the past two years will hold. Instacart, the grocery delivery startup, cut its internal valuation in March 38 percent to $24 billion from $39 billion.
In recent months, venture capital investors have warned of a coming recession and preached cautiously, telling companies to cut costs and freeze hiring. Funding for startups in the United States fell 23 percent in the last three months from a year ago, the biggest drop since 2019, according to PitchBook, which tracks startups. Nearly 350 tech startups around the world have laid off 53,000 workers this year, according to Layoffs.for your informationthat tracks startup layoffs.
Some startups have been forced to raise capital at lower valuations. This week, Klarna Bank, a Sweden-based buy-now-pay-later payment startup, Announced raised capital in a funding round that valued it at $6.7 billion. Investors had valued it at $45 billion last June.
Other startups are preemptively lowering their valuations as a way to attract employees. Startups compensate their workers with shares that promise to be valuable in an initial public offering or acquisition. But it’s a less attractive offer if job candidates think equity is overpriced.
Stripe was founded in 2010 by entrepreneurs and brothers John and Patrick Collison. Its software allows businesses to process payments online. The company began by selling to small startups and expanded to larger companies, which reportedly brought $2.5 billion in net income last year, according to Forbes. It employs more than 8,000 people, according to PitchBook.
The company has been named as a candidate to go public for years. But the IPO market has closed this year. Sales and public debuts of new companies fell 88 percent to $49 billion in the first six months of this year compared to the same period last year.