Scoop: Sequoia Capital offers to buy Stripe shares from investors
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Illustration: Annelise Capossela/Axios
Sequoia Capital is offering its investors a way to cash out of Stripe, the payments giant it first backed nearly 14 years ago, Axios has learned.
Why it matters: Limited partners in venture capital funds are increasingly desperate for liquidity, as companies like Stripe eschew IPOs.
Behind the scenes: Sequoia this morning emailed LPs in funds raised between 2009 and 2012, offering to buy up to $861 million of Stripe shares.
- The purchasers would be other, more recent Sequoia Capital funds — a process partially enabled by the firm's 2021 restructuring.
In the weeds: The price would be $27.51 per share, which is Stripe's most recent 409A mark and represents a $70 billion valuation. For context, Stripe was valued at $95 billion back in 2021, but by last summer had slashed its worth to $50 billion.
- Selling LPs would not pay carried interest. Sequoia partners would not profit on the sales, unless they had personal investments in the relevant Sequoia funds and chose to liquidate their stakes.
- The $861 million represents only around 10% of Sequoia's total FMV of Stripe shares.
- LPs have until August 14 to make a decision.
The big picture: Sequoia is recognizing what some of its investors need, while simultaneously expressing faith in Stripe's future.
- What's not clear, however, is why Sequoia is convinced that Stripe will enable an exit that rewards such faith.
- Internal messaging has been to expect an IPO eventually, but its actions have suggested that the founding Collison brothers would rather stay private indefinitely.
- In its letter to LPs, Sequoia argues that Stripe has proven to be "durable across economic cycles," delivers "direct revenue acceleration" for customers, and is useful to both small and giant companies.
By the numbers: Stripe says it handled more than $1 trillion in payments in 2023, up 25% from the prior year.
- Sequoia, meanwhile, distributed around $10 billion last year to its investors.
The bottom line: This could become a template for how Sequoia handles other long-in-the-tooth portfolio companies, and a cause for celebration among limited partners.
Update: Below is a copy of the letter sent to LPs:
