Sequoia Capital is providing a significant liquidity opportunity to Stripe investors by offering to purchase up to $861Mn worth of shares in the fintech giant. This comes as more of a response to the increasing demand for liquidity among limited partners (LPs) in venture capital funds, especially as companies like Stripe continue to delay their initial public offerings (IPOs).
Sequoia Capital’s offer is directed towards LPs in funds raised between 2009 and 2012. The proposed purchase price for the shares is $27.51 per share, which corresponds to Stripe’s most recent 409A valuation, setting the company’s worth at $70 billion. This valuation is a midpoint between Stripe’s 2021 valuation of $95 billion and its subsequent reduction to $50 billion last year. The offer by Sequoia provides a crucial liquidity option for early investors in Stripe, who have been waiting for a significant return on their investment.
The liquidity offer is facilitated by more recent Sequoia funds, leveraging the restructuring the firm underwent in 2021. Selling LPs will benefit from not having to pay carried interest on these sales, and Sequoia partners will not profit unless they have personal investments in the relevant funds and choose to liquidate those stakes. This offer represents about 10% of Sequoia’s total fair market value of Stripe shares, and LPs have until August 14 to make their decision.
This development comes at a time when liquidity is increasingly scarce for venture capital LPs. The broader market context sees many high-valued private tech companies delaying their IPOs, leading to extended periods before investors can realize returns. And speaking of Stripe, founded by John and Patrick Collison, has shown substantial growth since its inception, processing over $1 trillion in payments in 2023 — an increase of 25% from the previous year. Despite this growth and significant valuation, Stripe has maintained a cautious approach to going public, preferring to stay private. It was most recently valued at $65 billion a few months ago.
Today, Stripe operates in a highly competitive market, with formidable rivals such as PayPal Holdings Inc. and Adyen NV. Despite this competition, Stripe has carved out a significant market presence, facilitated by its innovative payment processing solutions and robust growth trajectory.
