Payments Startup Stripe Reduces Internal Rating by 28%

Stripe, a payments startup that has been one of Silicon Valley's most valuable private tech companies, has lowered its internal valuation by 28%, according to a person with knowledge the situation, in another sign of how the fluctuating stock market and economic uncertainty are 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 held 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 news of Stripe lowering its internal valuation.

The shares of technology companies such as Meta, Netflix and Coinbase began to fall this spring, as rising inflation and interest rates created uncertainty about their ability to continue to grow as rapidly as they have been. The sale prompted private start-ups to assess whether their skyrocketing valuations over the past two years would hold up. Instacart, the grocery delivery startup, lowered its internal valuation in March by 38% to $24 billion from $39 billion.

These In recent months, venture capitalists have warned of a coming recession and preached caution, telling companies to cut costs and freeze hiring. Funding for startups in the United States has fallen 23% in the past three months from a year ago, the biggest drop since 2019, according to PitchBook, which tracks startups. Nearly 350 tech start-ups globally laid off 53,000 workers this year, according to Layoffs.fyi, which tracks start-up layoffs.

Some start- ups were forced to raise capital at lower valuations. This week, Klarna Bank, a Swedish "buy now, pay later" payments startup, announced it had raised capital in a funding round that valued it at $6.7 billion. of dollars. Investors valued it at $45 billion last June.

Other start-ups are preemptively lowering their valuations to attract employees. Startups pay their workers with stocks that promise to be valuable in an initial public offering or acquisition. But it's a less attractive offer if job applicants think equity is overvalued.

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 start-ups and expanded to larger companies, bringing in $2.5 billion in net revenue last year, according to Forbes. It employs more than 8,000 people, according to PitchBook.

The company has been an IPO candidate for years. But the IPO market has been abysmal this year. Startup sales and IPOs fell 88% to $49 billion in the first six months of this year compared to the same period last year.