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Stripe Secondary Deal Analysis: A Closer Look at the Attractive Investment Opportunity

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As we enter a new year, venture capitalists and founders are optimistic that exits will start to rebound in 2024. A recent survey by TechCrunch+ found consensus among VCs that exits will begin to recover this year, but the timing and manner of these exits remain unclear.

The Consensus: Stripe Will Go Public This Year

One thing is certain, however: fintech company Stripe will go public in 2024. The investors surveyed are not alone in their enthusiasm for a potential Stripe exit this year. According to secondary data tracker Caplight, there has been a surge of interest from buyers seeking shares in the company.

A Closed Transaction Valuing Stripe at $53.65 Billion

On Tuesday, January 2nd, just one day after New Year’s Day, a secondary sale closed that valued Stripe shares at $21.06 apiece. This values the startup at an impressive $53.65 billion, according to Caplight data.

Stripe declined to comment on the transaction.

Why this Deal Matters

There are several reasons why this deal is significant. Firstly, Stripe’s valuation has increased from its most recent primary round in March 2023, when the company was valued at $50 billion. While a $3 billion valuation increase may seem minor compared to the company’s peak value of nearly $100 billion in early 2022, it is a promising sign.

This secondary sale shows that investors believe Stripe is growing its valuation again, which is an anomaly among many other startups that are not AI companies or SpaceX. In December, multiple secondary investors shared their thoughts on the state of secondaries and where they were finding attractive opportunities. They all agreed that high-flying startups from 2021 still needed to lower their valuation to be attractive.

Stripe’s Valuation Anomaly

More than 40 investors share their top predictions for 2024

According to Caplight data, over 40% of the top 100 venture-backed companies have valuations above $5 billion. However, many of these companies are still struggling with valuation decreases in recent months.

Stripe’s ability to increase its valuation after slashing it by 52% in 2023 is a testament to the company’s growth and resilience. Investors looking to buy shares at this growing valuation is also a good sign of a potential IPO to come.

Using Secondary Deal Information to Track and Predict IPOs

In March, I spoke with a handful of secondary investors about how we could use secondary deal information to track and predict when companies were going to go public. They told me that if any of these overvalued late-stage startups wanted to attract investors for an IPO, they would need to lower their valuation.

However, in the case of Stripe, its ability to increase its valuation is a promising sign for potential investors. This could be attributed to the company’s strong growth prospects and its ability to maintain a high valuation despite recent market fluctuations.

Conclusion

As we enter 2024, venture capitalists and founders are hopeful that exits will start to rebound. While the timing and manner of these exits remain unclear, one thing is certain: fintech company Stripe will go public this year. The closed transaction valuing Stripe at $53.65 billion is a promising sign for potential investors and demonstrates the company’s growth and resilience.

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