Sequoia Capital Confirms Stripe's $70 Billion Valuation

Stripe, the payments giant, has delayed its public offering for so long that its major investor, Sequoia Capital, is taking innovative steps to provide returns to its limited partners.

Sequoia Capital recently emailed its limited partners (LPs) from funds raised between 2009 and 2011, offering to buy up to $861 million worth of shares in Stripe, as reported by Axios. Although Sequoia has declined to comment, the email shared by Axios indicated that the buyers would be other, newer Sequoia funds. This maneuver highlights two significant trends. Firstly, it underscores the growing impatience among LPs for liquidity in a market where IPOs have been scarce. So far, 2024 has only seen four venture-backed tech IPOs: Reddit, Astera Labs, Ibotta, and Rubrik, all occurring in March and April.

More notably, Sequoia's move signals the firm’s confidence in Stripe’s future and its eventual ability to exit in a manner that will reward investors generously. In the letter to LPs, Sequoia expressed its “highly optimistic” outlook on Stripe’s future, noting the company’s “durable” performance across economic cycles.

Back in March 2021, Stripe was valued at $95 billion, making it one of the highest-valued private startups globally, and seemed poised for a highly anticipated IPO. However, by January 2023, reports emerged that Stripe had set a 12-month deadline for either going public or pursuing a private market transaction, such as a fundraising event or tender offer. Ultimately, Stripe opted for the latter.

Last summer, Stripe was valued at $50 billion during its Series I funding round, raising $6.5 billion, which was a significant drop from its peak $95 billion valuation. In February, it was reported that Stripe had reached agreements with investors to provide liquidity to current and former employees through a tender offer valued at $65 billion. Although this showed progress towards regaining its peak valuation, it still remained well below its highest point.

Nevertheless, even at a $65 billion valuation, Stripe continued to rank among the world's most valued startups. Since 2011, Sequoia has invested a total of $517 million in Stripe. In its letter to LPs, the firm mentioned that Stripe's most recent 409A valuation stood at $70 billion, and Sequoia's entire stake was valued at $9.8 billion. Overall, Sequoia reportedly distributed $10 billion to its investors in 2023.

With Stripe conducting a substantial tender offer and Sequoia working to return cash to its earlier funds, it indicates that the fintech giant is not planning an IPO in the near future. It’s also noteworthy that Sequoia partners Luciana Lixandru and Kevin Kelly of Sequoia Heritage sit on Stripe's board, providing them with inside knowledge of Stripe's financial plans. Lixandru took over the board seat from Michael Moritz after his departure from the renowned VC firm in December.

There remains a possibility that Stripe may never go public. Despite increasing competition, the 15-year-old Stripe has continued to grow impressively. In its annual letter in March, Stripe reported surpassing the $1 trillion total payment volume milestone in 2023, with a 25% increase in payment volume. The company also stated that it was “robustly cash flow positive in 2023 and expects to be again in 2024,” suggesting that it does not urgently need to raise capital, even as it explores ways to allow its employees and VC investors to sell shares.