Startup Stripe intends to channel investment into paying employees’ salaries
US startup Stripe has received a US$6.5bn investment. Despite the funding, the fintech business’ valuation fell to US$50bn. The company’s top valuation was US$95 billion, making it the second most expensive company in the US. SpaceX’s space project takes the top spot in terms of value.
Goldman Sachs, Founders, Temasek and others participated in Stripe’s funding round. The startup’s representatives plan to use the funds to pay salaries to employees and income to investors. This stance differs from most companies, which prefer investing in business development and entering new markets.
Like most of the IT sector, Stripe is going through tough times. The startup has already laid off around a thousand employees. It has also had to optimise costs in other areas. The downgrade of the fintech startup is due to a general mood of uncertainty that has replaced overly optimistic expectations. The market is now being impacted by several negative factors, including the energy crisis, rising inflation and a slowdown in the global economy.
Stripe history
Stripe was founded by two Collison brothers in 2010. By 2021, the startup was serving customers in more than 50 countries with a total value of US$640 billion. The company has two offices: in Dublin, where the founders are from, and in San Francisco. Stripe’s gross revenue is 2-3% of the commission the service charges for its payment services.
In 2021, the company’s revenue reached US$2.5 billion, which prompted significant investors to turn their attention to fintech. As a result, the startup raised US$2.4 billion, bringing its valuation to US$95 billion.
In 2022, Stripe’s success was shaken by global factors. Over the past period, the S&P 500 Index has fallen by almost 20%, affecting large companies and causing volatility in the market. While large businesses have enough resources to maintain stability, small firms have felt the full impact of the crisis. It is small and medium-sized businesses that are Stripe’s main customers, and the decline in transactions for them has led to a drop in fintech revenues. This dynamic has also affected the startup’s valuation, which has lost almost half its peak value in 2022.
The company plans to expand into the Middle East and Asia to improve its performance. Stripe is also working on new products, among them an app shop. However, it is unknown when the startup will introduce solutions, especially as the investment received will go towards other tasks, such as meeting employee obligations.
