The company is 12 years old, the biggest player in their domain (online payments) and still needs that much funding? Where is it time to turn the knobs and start producing income?
It’s the second paragraph of the OP
They are doing this so their employees can pay taxes on otherwise illiquid shares (i.e. taxes the employees can’t afford).
The way I understand it is that if they wouldn't have this round, lots of very valuable, tenured employees would be f-ed over, which could cause them to leave on very bad terms and a PR nightmare that could make attracting workers hard.
There’s an appreciable difference between a company selling newly issues shares to fund their corporate expenses, and arranging a liquidity event for your employees. That’s what they are explaining in that paragraph.
Obviously it can be very much in their interest to do this, while it is still also true that “Stripe does not need this capital to run its business.”
It's a roundabout way for employees to sell stock to investors with Stripe acting as a middle man.
But if the market recovers and they want to do an IPO then, wouldn’t they be in the same position if they IPOd now, and then growth of the market would cause their stock to grow as well?
Stripe can wait, that isn't the problem for them and is what they're doing. The board can also waive these fees, but that shifts liability from Stripe to each individual employee in question and that's the last thing they want, to piss off early employees.
If they then wait for the same time until they will wait until Stripe IPOs, the stock would grow to the same level.
Secondly, yes their stock could grow after the IPO, however the stock would be publicly owned at that point so the profit would go to the public shareholders instead of the current holders of the stock (founders, investors, employees).
I still think (and I might be wrong) Stripe put themselves in a corner position, and raising 6.5 billion USD after 13 years of operating to cover this cost seems like something that could definitely have been avoided.
There are lots of other considerations that come along with an IPO and Stripe is addressing the core problem (early employee liquidity) with a targeted solution.
(And yes -- they would've been better off doing two years ago. But timing is hard, and that's not really relevant to their decision now, which is the best at the current time given the past.)
But, they were put into this position for waiting for too long and not going public earlier. I have a feeling that Stripe is doing a classic 'emotional investor' mistake. They are considering their valuation to be 90b+, and see this as 'just 50, it will bounce back', not considering that company went from 0 to 50b. There is no guarantee that it will go above the current valuation, and anything below that is going to be harmful, even for current employees who were saved by this move.
What happens then?
The “chance” of a startup making it big is infinitesimal.
First only 1 in 10 startups “succeed”. And “success” means that the VCs didn’t lose money. By the time you join a late stage startup where some of the risk of completely failure are derisked, the chance of outsized gains are also lower.
Besides, then we get back a private company, every year I work without the company going public, I’m even less diversified because I am more dependent on the company succeeding.
In a public company, I can derisk every six months.
And then there is the issue that Stripe employees have to pay taxes but they couldn’t sell their equity to pay for it. In a public company, you can choose to sell shares to cover taxes.
Similarly, if they get a bad anti-employee rep, they'll suffer in hiring. The company needs to make concessions to avoid that fate
It's a way to keep employees happy since they've decided it's not a good time to IPO and they have a lot of employees with thousands or even millions of dollars locked up in illiquid stock.
I know the appeal of Stripe was that it was easy and attractive; using their embedded widgets allowed you to keep a low PCI compliance profile. But similar products are rapidly becoming table stakes in the industry.
When that's no longer your secret sauce, how do they fend off when merchants scale to a point where their finance guy says "We can save money by swapping Stripe for Brand X Gateway"