Stripe would be an ugly pattern for Silicon Valley
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Robert Cyran
NEW YORK, July 16 (Reuters Breakingviews) -Stripe develops software to facilitate payments, but its financial backers are struggling to receive theirs. Started by John and Patrick Collison in 2009, the financial technology company has given no sign of going public soon, making it hard for venture capitalists to cash out. Enter Sequoia Capital with a plan that will buy some time, but one which if applied too often would distort the investment model.
Most successful 15-year-old startups already have been bought by a bigger rival or proceeded with an initial public offering. Stripe hasn’t. To appease limited partners itchy to exit funds from 2009 to 2012, Sequoia is offering to buy up to about $860 million of shares using newer funds.
There’s no obvious reason for an IPO. Although it raised $6.5 billion last year, Stripe says the business generates more cash than it spends. Outside investors enable employees to sell their stakes through tender offers, such as the nearly $700 million one in April. The company avoids regulatory and disclosure hassles while fetching a higher valuation than it probably could in public markets.
Total payment volume at Stripe increased 25% last year, exceeding $1 trillion. European rival Adyen ADYEN.AS processed a similar amount and is expanding just as quickly, but its market capitalization is less than $40 billion. Stripe, at $70 billion, may have more growth ahead of it and new services like automated billing also look promising. In today’s choppy IPO markets, however, it might be hard to persuade investors to pay for the prospects.
Sequoia’s plan indicates confidence. It has invested more than $500 million in Stripe, according to a letter to investors published by Axios this week. For now, though, it has no way to turn a $9 billion return on paper into reality.
New Sequoia funds, including an open-ended one, will buy out investors in older ones. If successful, it will plaster over an idiosyncratic problem. There’s liquidity for those who want it, a fresh opportunity to get behind the Collisons, and Stripe avoids the public spotlight for longer.
The problem would be too many Silicon Valley founders getting similar ideas. If companies like Elon Musk’s SpaceX decide they want to stay private, it would significantly alter the venture capital business. The idea has always been to get in early on up-and-comers and get paid out a few years later. Paying steep fees to own chunks of large, mature companies for an indeterminate period of time is something different altogether.
Follow @rob_cyran on X
CONTEXT NEWS
Venture capital firm Sequoia Capital is using newer funds in an offer to buy as much as $861 million of Stripe shares held by limited partners in its funds established between 2009 and 2012 for $27 apiece, imputing a $70 billion valuation, Axios reported on July 15.
Sequoia said in a letter to investors it had invested a total of $517 million in Stripe, now worth $9.8 billion at the latest valuation.
Number of US tech IPOs has slowed https://reut.rs/4f3iCdc
Editing by Jeffrey Goldfarb and Pranav Kiran
Últimas noticias
Descargo de responsabilidades: Cada una de las entidades de XM Group proporciona un servicio de solo ejecución y acceso a nuestra plataforma de trading online, permitiendo a una persona ver o usar el contenido disponible en o a través del sitio web, sin intención de cambiarlo ni ampliarlo. Dicho acceso y uso están sujetos en todo momento a: (i) Términos y Condiciones; (ii) Advertencias de riesgo; y (iii) Descargo completo de responsabilidades. Por lo tanto, dicho contenido se proporciona exclusivamente como información general. En particular, por favor tenga en cuenta que, los contenidos de nuestra plataforma de trading online no son ni solicitud ni una oferta para entrar a realizar transacciones en los mercados financieros. Operar en cualquier mercado financiero implica un nivel de riesgo significativo para su capital.
Todo el material publicado en nuestra plataforma de trading online tiene únicamente fines educativos/informativos y no contiene –y no debe considerarse que contenga– asesoramiento ni recomendaciones financieras, tributarias o de inversión, ni un registro de nuestros precios de trading, ni una oferta ni solicitud de transacción con instrumentos financieros ni promociones financieras no solicitadas.
Cualquier contenido de terceros, así como el contenido preparado por XM, como por ejemplo opiniones, noticias, investigaciones, análisis, precios, otras informaciones o enlaces a sitios de terceros que figuran en este sitio web se proporcionan “tal cual”, como comentarios generales del mercado y no constituyen un asesoramiento en materia de inversión. En la medida en que cualquier contenido se interprete como investigación de inversión, usted debe tener en cuenta y aceptar que dicho contenido no fue concebido ni elaborado de acuerdo con los requisitos legales diseñados para promover la independencia en materia de investigación de inversiones y, por tanto, se considera como una comunicación comercial en virtud de las leyes y regulaciones pertinentes. Por favor, asegúrese de haber leído y comprendido nuestro Aviso sobre investigación de inversión no independiente y advertencia de riesgo en relación con la información anterior, al que se puede acceder aquí.
