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Stripe raises $70M at $3.5B valuation, double that of January

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Re: Stripe raises $70M at $3.5B valuation, double that of January

#61

Post by downandout »

keithwinstein wrote: post #13

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…

Technically, things are only worth what people will pay for them. Accordingly, you could also argue that the value of the company cannot be known unless and until it is wholly acquired. But these kinds of arguments are somewhat pedantic. They have built a tremendous amount of value. Whether it's $1 billion or $3.5 billion, it's more value than virtually everyone upvoting your comment has built.

Re: Stripe raises $70M at $3.5B valuation, double that of January

#62

Post by nemanja »

downandout wrote: post #61
keithwinstein wrote: post #13

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…

Technically, things are only worth what people will pay for them. Accordingly, you could also argue that the value of the company cannot be known unless and until it is wholly acquired. But these kinds of arguments are somewhat pedantic. They have built a tremendous amount of value. Whether it's $1 billion or $3.5 billion, it's more value than virtually everyone upvoting your comment has built.

Exactly! I would actually argue that if anyone wanted to buy the whole company tomorrow, they would probably have to pay at least 4-5x premium to today's valuation (purely illustrative/gut figure, I have no inside knowledge here aside from what's publicly known).

Stripe is simply one of the SV's greatest hits and has a ton of upside and real option value. Any investor who got in today understands that and would have no good reason to sell for anything less than a really nice premium to where they got in.

Simply put, in the current market their IPO would literally fly off the shelf, they would get great institutional public investors and have a ton of good growth financing options available to them down the road (follow-ons, converts, heck even straight debt soon). Every investor in the deal understands that very well. Having said that, the investor roster doesn't look like a pre-IPO round (I suspect they would have likes of Templeton otherwise), so they will probably grow the company quite a bit more before they hit the public markets (needless to say - a smart move).

At any rate, I completely agree that pointing out that the preferred is more valuable than common is red herring. Theoretically yes - but in this case and in the case of every great late-stage private company, I would argue that the price of the common >= price of the latest preferred round.

Re: Stripe raises $70M at $3.5B valuation, double that of January

#63

Post by ganga99 »

pc wrote: post #22
pc86 wrote: post #5

Any idea what they plan on using this money for? Having just raised $80M in January what could they need another $70M for?

We still haven't built most of the stuff we want to build. We're not available in most countries; there are countless payment instruments we don't support; there's a lot of functionality we'd like to add. We want to do this as quickly as possible, which is expensive, and we assume that every round we raise might be our last ever. That said, we've generally erred towards raising less rather than more -- most companies…

Patrick , Any plan coming to India ? Paypal sucks like hell but we have no other option to bill customers in US. There are other options available but they big cut in revenue and are slow. Something like Stripe which allows to bill clients in US, Europe will be very good.

Re: Stripe raises $70M at $3.5B valuation, double that of January

#64

Post by nemanja »

bachback wrote: post #11
ChuckMcM wrote: post #10

Earlier quoted context omitted.

Since we don't know, we can speculate. One, they are expecting that it will become difficult to raise money in the future and they are not yet profitable. That implies they do not see an IPO in their future. Two, they have been doing this a long time and some of their early investors/execs want a bit of liquidity, and since they haven't (or can't) offer shares to the public, they are using a private markets to provid…

IPO certainly not - it's extremely unattractive in the current regulatory regime (death of the IPO [1]). I wonder what their long-term strategy looks like given their margins can't be very high as a front-end for credit card companies. [1] http://www.vox.com/2014/6/26/5837638/the-ipo-is-dying-marc-a...

Nah, not quite. Public markets are red hot right now. Nasdaq is ~20% above all time high of '99 madness. IPO always was and always will be the best financing option down the road for great companies, Stripe included. Yes, there is a bit more regulation with SoX and such, and yes it's a bit more painful than it used to be back in the days, but some regulatory overhead makes not one iota of difference to a great company. Sure, middle of the road companies in VC's portfolios may not find IPOs as attractive as they were before and will exit through M&A.

As you can see from CEO's post a few above, these guys are nowhere near done, they have their work cut out for them in terms of expansion and accordingly a ton of growth prospects ahead. From that standpoint and because private funding is plentiful and attractive for a company of this profile, I agree - IPO is probably not the best choice at the moment [but you can read above post between the lines that they are heading there]. You see, in an IPO, they would need to sell a bigger chunk of the company to have a decent liquidity in the stock and private markets allow them to "right-size" the rounds. Also, the whole IPO process is a lot of work and bit of a pain and could be distracting from day-to-day business of running a rocket ship.

Re: Stripe raises $70M at $3.5B valuation, double that of January

#66

Post by cdcarter »

nhayden wrote: post #58
minimax wrote: post #51

Earlier quoted context omitted.

Please don't submit articles which are behind paywalls. I'm pretty sure if that's what the moderators wanted, they could just block wsj.com and ft.com directly. Personally I would rather see more payed content because I think it tends to be of higher quality, especially when it comes to business/finance journalism.

The issue is the same information is available from other sources without a paywall and the difference in information or insight is negligible for articles like this.

Then, if anything, we should be promoting higher quality sources, not pushing people to post ways to circumvent paid content.

Re: Stripe raises $70M at $3.5B valuation, double that of January

#67

Post by joshdotsmith »

matthewarkin wrote: post #60
kawsper wrote: post #29

Earlier quoted context omitted.

Please be more active on IRC. Right now it is a guy called 'markin' that is doing all the support, and he isn't even hired by you. He says he is happy with the t-shirts and stuff that he have received, but it would be nice with a more direct route to actual employees.

I've spoken to some Stripes about it, getting on top of IRC is definitely something they're working on and some hints of that are showing with the new developer support position. I'm always happy to help out, Stripe's a fun and easy platform to develop upon, and its always fun to see what other people are building, see how they're using Stripe, etc. I definitely think I've learned as much helping as I've taught. I wi…

Seriously, thank you for all the help you've given to those of us who've freely taken it on IRC. I wish you were a Stripe employee, in all honesty.

Re: Stripe raises $70M at $3.5B valuation, double that of January

#68

Post by joshdotsmith »

kawsper wrote: post #29
pc wrote: post #20

Earlier quoted context omitted.

I'm very sorry about that! The support team has expanded a lot this year; we're working on it. Feel free to email me directly if I can ever help -- patrick@stripe.com.

Please be more active on IRC. Right now it is a guy called 'markin' that is doing all the support, and he isn't even hired by you. He says he is happy with the t-shirts and stuff that he have received, but it would be nice with a more direct route to actual employees.

I wish I could throw all of my karma at this. I would really love more support in IRC, especially since I think fully owning some fanatical support for a developer-focused company can only be a good move. It'd also end up meaning a much better product.

Re: Stripe raises $70M at $3.5B valuation, double that of January

#69

Post by bachback »

nemanja wrote: post #64
bachback wrote: post #11

Earlier quoted context omitted.

IPO certainly not - it's extremely unattractive in the current regulatory regime (death of the IPO [1]). I wonder what their long-term strategy looks like given their margins can't be very high as a front-end for credit card companies. [1] http://www.vox.com/2014/6/26/5837638/the-ipo-is-dying-marc-a...

Nah, not quite. Public markets are red hot right now. Nasdaq is ~20% above all time high of '99 madness. IPO always was and always will be the best financing option down the road for great companies, Stripe included. Yes, there is a bit more regulation with SoX and such, and yes it's a bit more painful than it used to be back in the days, but some regulatory overhead makes not one iota of difference to a great compan…

Yes, quite. Look at this chart[1] and animation [2]. You will find that there are almost no IPO's below 1B$ in the 2010's. What used to be the default option, became: stay private as long as you can. If Stripe is worth 3B$ now, what stops them from going public? Same for AirBnb (13B$ est) and Dropbox(10B$ est).

[1] http://cdn.ientry.com/sites/webpronews/article_pics/tech_ipo...

[2] http://www.nytimes.com/interactive/2012/05/17/business/dealb...

Re: Stripe raises $70M at $3.5B valuation, double that of January

#70

Post by nemanja »

bachback wrote: post #69
nemanja wrote: post #64

Earlier quoted context omitted.

Nah, not quite. Public markets are red hot right now. Nasdaq is ~20% above all time high of '99 madness. IPO always was and always will be the best financing option down the road for great companies, Stripe included. Yes, there is a bit more regulation with SoX and such, and yes it's a bit more painful than it used to be back in the days, but some regulatory overhead makes not one iota of difference to a great compan…

Yes, quite. Look at this chart[1] and animation [2]. You will find that there are almost no IPO's below 1B$ in the 2010's. What used to be the default option, became: stay private as long as you can. If Stripe is worth 3B$ now, what stops them from going public? Same for AirBnb (13B$ est) and Dropbox(10B$ est). [1] http://cdn.ientry.com/sites/webpronews/article_pics/tech_ipo... [2] http://www.nytimes.com/interactive/…

When looking at those charts, I would disregard the relative density during the IPO madness of '98-00, time when IPO was the default option for companies that should have never been public, to great retail investor fanfare, massive speculation, and ultimately untimely demise. Also, take out outliers (say Facebook and Google), periods of recession, adjust for inflation and all of the sudden, they don't look that much different (perhaps if you also squint a little or close one eye).

These charts only include tech, but there are other industries, too. For example, we had an explosion of IPOs in oil & gas LPs in the last couple of years. How is it not burdensome for a $250mm oil and gas LP to go public but it is for say $1bn tech company?

Make no mistake - there is nothing that would stop any of the companies you listed from going public (and I am pretty sure they will all be public in due time). For now, it is a matter of focus and choice. They all have access to great terms in the private markets. Given access to capital, it has always been more advantageous to stay private for as long as you can. For one, it allows you to focus on metrics that are relevant to your business (say nights booked or payments processed) and growth and not be distracted by GAAP measures and what equity analysts think you should measure. Also, there is no "stock ticker" distraction and a bunch of other reasons.

This all changes a bit when they get into the acquisition mode, as having liquid acquisition currency in form of publicly traded stock helps make bigger and bolder moves. It's also nice to give some liquidity to early employees as well.

While this dynamic may suck for growth oriented retail investors and mutual funds, I think it works well for the companies in question and at the end of the day - that's what really matters.

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