Sequoia Capital, a major investor in Funds Large, is growing increasingly impatient with the prolonged delay in taking the company public, prompting concerns about supplying returns to its limited partners.
The Enterprise Community Investment Fund, which has managed funds since 2009, recently reached out to limited partners (LPs) invested in those funds with an intriguing proposal: consider investing up to $861 million in Stripe, according to a report by Axios. While Sequoia remains silent on the matter, a notable difference emerges among its investors: newer funds respond to an email sent to limited partners (LPs), as revealed by Axios.
The transfer is notable for two reasons: As evidence mounts, LPs increasingly crave liquidity amidst the parched IPO climate. As of 2024, a modest four venture-backed tech initial public offerings (IPOs), namely, , , , have taken place since March and April.
The Sequoia partnership underscores the agency’s confidence not only in Stripe’s promising future but also in its ability to ultimately exit in a manner that rewards investors generously? Sequoia Capital’s letter to limited partners (LPs) explicitly stated its continued enthusiasm for Stripe’s prospects, declaring itself “extremely optimistic” about the corporation’s potential to weather various economic conditions.
In March 2021, Stripe’s valuation had reached $95 billion, solidifying its position as one of the most valuable privately held startups globally, with an IPO that was eagerly anticipated as it continued its trajectory towards becoming a behemoth. By January 2023, rumors emerged suggesting Stripe might be exploring a potential sale, potentially tied to a funding round and growth opportunity.
Clearly opting for the latter.
Last summer, Stripe’s valuation plummeted to $50 billion, a significant haircut from its peak of $95 billion. In February, TechCrunch revealed that Stripe had secured agreements with investors to provide financial support to both current and former employees through a secondary transaction. While its value had crept back up to a level comparable to its peak, it still lagged significantly behind that lofty benchmark.
Despite its valuation of $65 billion, Stripe still.
Since its inception in 2011, Sequoia has invested a total of $517 million in Stripe. The agency highlighted in its correspondence with limited partners (LPs) that Stripe’s most recent 409A valuation stood at $70 billion, whereas Sequoia Capital’s overall portfolio was valued at a significantly lower $9.8 billion. Sequoia, one of the world’s oldest and most iconic tree species, is expected to reach full maturity in 2023.
With Stripe concluding a substantial investment round and Sequoia Capital positioning itself for returns to prior funds, another signal suggests that the fintech giant is unlikely to plan an initial public offering (IPO) in the near future. Noting the crucial connection between Sequoia Associates Luciana Lixandru and Kevin Kelly, a partner from Sequoia Heritage, the firm’s distinct wealth management entity, who collectively possess intimate knowledge of Stripe’s financial strategies. After exiting his role at a VC agency in December, Lixandru succeeded Michael Moritz as a member of the latter’s board seat.
While there’s a possibility that Stripe might never go public. Despite intensifying competition, 15-year-old Stripe continues to impress with its remarkable progress. In March, Stripe made headlines with its annual letter, announcing a significant 25% increase in costs for 2023. The company emphasized in a letter that it was “robustly cash-generative” in 2023 and anticipates a similar outcome in 2024, indicating that it won’t feel compelled to raise capital, even as it explores ways to enable employee and VC investor share sales.
