Payments giant Stripe has delayed going public for so long that its major investor Sequoia Capital is getting creative to offer returns to its limited partners.
The venture firm emailed LPs in funds raised between 2009 and 2011 with an offer to buy up to $861 million worth of shares in Stripe, Axios reported. Sequoia has declined to comment but the buyers would be other, newer Sequoia funds, according to the email sent to LPs, that was shared by Axios.
The move is a notable for two reasons. For one, it’s evidence that LPs are increasingly antsy for liquidity in this dry IPO market. (2024 thus far has delivered just four venture-backed tech IPOs, Reddit, Astera Labs, Ibotta and Rubrik – in March and April.)
But perhaps more telling is that Sequoia’s gesture reflects that the firm is confident not only of Stripe’s future, but in its ability to eventually exit in a way that will reward investors handsomely. In the letter to LPs, Sequoia wrote that it remained “highly optimistic about Stripe’s future” and that the company is “durable across economic cycles.”
Remember, in March of 2021 Stripe was valued at $95 billion, making it one of the highest-valued private startups in the world and appeared to be steamrolling towards a big, highly-anticipated IPO. In January of 2023, it was reported that Stripe had set a 12-month deadline for itself to go public or it would pursue a transaction on the private market, such as a fundraising event and a tender offer.
It obviously opted for the latter.
Last summer, Stripe was valued at $50 billion when it raised $6.5 billion in Series I funding, a big haircut from its heyday $95 billion. In February, TechCrunch reported that Stripe had inked deals with investors to provide liquidity to current and former employees through a tender offer at a $65 billion valuation. While that meant it is climbing back to that peak valuation, it was still far below the high mark.
Still, even at $65 billion, Stripe remained one of the world’s most valued startups.
In total, since 2011, Sequoia has invested a total of $517 million in Stripe. In its letter to LPs, the firm noted that Stripe’s most recent 409A valuation was $70 billion and that Sequoia’s entire position is valued at $9.8 billion. As a whole, Sequoia reportedly distributed $10 billion to its investors in 2023.
Now that Stripe has conducted a big tender offer, and Sequoia is maneuvering to return cash to earlier funds, this is another indication that the fintech giant not likely planning an IPO anytime soon. It’s also worth pointing out that Sequoia Partner Luciana Lixandru and Kevin Kelly, a partner from Sequoia Heritage, the firm’s separate wealth management business, both sit on Stripe’s board, giving them inside knowledge of Stripe’s financial plans. Lixandru replaced Michael Moritz board seat after he exited the stories VC firm in December.
There is, of course, the possibility that Stripe will never go public. Despite increased competition, 15-year-old Stripe has continued to grow impressively. In March, Stripe noted in its annual letter that it had crossed the $1 trillion total payment volume metric in 2023 after seeing a 25% bump in its payment volume. The company also said in the letter that it was “robustly cash flow positive in 2023 and expects to be again in 2024,” which means it won’t feel the urgency to raise capital, even as it searches for ways to allow its employees and VC investors to sell shares.
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