It seems churlish to keep pointing this out, but (assuming the investment is consistent with the typical Silicon Valley practice), it is just not true that this investment, or any participant, has now valued the company at $3.5 billion. Stripe has sold the investors a new round of senior preferred shares (again, making assumptions). These shares carry various bells and whistles whose terms we don't know -- but probab…
After reading through the quora article, I agree that different tranches may have different terms. However, if investors are buying 70M shares at $1 each, it implies that they believe a share of the company is worth that much. If the company has 3.5B shares, that's an implied valuation of $3.5B. In that sense, the investment does value the company at $3.5B. Whether that valuation (or a higher or lower one) is realize…
Well, you need to unpack what "worth" means in that above sentence. If you're using some kind of probability distribution over expected future outcomes (say, using some present value future discounted cashflow model with a probability distribution of possible future cashflows), you can see that there are all these possible future worlds that Stripe can inhabit. In some of these, Stripe is making lots of money, and so the stock is "worth" a lot. In some of these, Stripe is crashing and burning. In those worlds, common stock is worthless. But the preferred stock isn't as badly off due to the 1x (or higher) liquidation preference, and the other terms. So the expected value of the preferred stock across all these worlds is higher than that of common, and imputing its value over common doesn't quite make sense.