Digital payment company Stripe announced Wednesday it has raised $6.5 billion in a series I funding round to put its valuation at $50 billion. The company was expected to raise around $2 billion.

The new valuation comes a few months after Stripe laid off about 1,200 employees in a move to cut costs.

GIC, Goldman Sachs Asset and Wealth Management and Temasek are among new investors in the round. They teamed up with existing investors Andreessen Horowitz, Baillie Gifford, Founders Fund, General Catalyst, MSD Partners and Thrive Capital.

The payment processing giant said the new funds will be used to  “provide liquidity to current and former employees and address employee withholding tax obligations related to equity awards, resulting in the retirement of Stripe shares that will offset the issuance of new shares to Series I investors.”

Stripe has grown from a single tool-code for developers, tax and other fintech tools to a giant in the payment industry since it was founded in 2010. The company has onboarded other services including cryptocurrency and Buy Now Pay Later that it partnered with Affirm late last year to integrate. It recently went into partnership with OpenAI and has set a 12-month deadline for an IPO decision.

Two months ago, Stripe cut its internal valuation to $63 billion. TechCrunch reported that the 11% cut came after an internal valuation cut that occurred six months prior, which valued the company at $74 billion.

Forbes estimates that with its current valuation, the Collison brothers, who still run the company, are now worth $5.5 billion with 11% stake each, down from $9.5 billion at Stripe’s peak valuation in 2021.

The valuation reduction came as part of broader market correction in the tech industry. Stripe has cut its valuation internally on at least three occasions, reducing it from $95 billion where it was two years ago, to $63 billion early this year. The company said in a press statement that it does not need the new funding to run its business.

Stripe said last year that all those affected by the November 2022 lay off will be given at least 14 weeks’ worth of pay, although it will depend on the time they served at the company. Also, the company will pay the full 2022 annual bonus, though it will be prorated if any member of the laid workforce joined last year.

In 1994, Bill Gates famously said “Banking is necessary, banks are not”. And in 2017, I made a video which I introduced with this note: “In this videocast, I discuss the need to build a truly pan-African digital remittance/transfer banking product which is agnostic of location or currency in Africa. None of the products we have today meets that standard. Largely, I envisage a situation where all you need to buy and sell across Africa is one bank account in just one African Union country.

“With that, you do not have to even think about the specific currency of that account as technology will seamlessly make it possible to access other African markets for payments, transfer, etc. The banks or fintech companies must still comply with all regulations related to international transfers, forex, etc. The only difference is that customers will not see them as they will be hidden with technology.”

At 7pm WAT, at Tekedia Mini-MBA, we will discuss “API Neobanking and Location-Agnostic SME Banking” when the team from KlaDot, a US-based neobank, comes to explain its mission to bring that future to us.

Meanwhile, we have opened registrations for the next edition of Tekedia Institute Mini-MBA here

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Comment 1: I regret to disagree with Bill. Banks might not have helped him a great deal, maybe, because of his situation. But they are helping many individuals and businesses across domains.

Without banks, many businesses would not scale up… In fact, economic growth and sustainability will be uncertain as banks fund private investments through loans; hence, shifting Aggregate Demand(s) outward to closing in on Potential GDP.

The institutions (whether physical buildings with people or online facilities) are highly necessary for any economy to flourish.

In modern economies, for banking to take place, there must be deposits; and for those deposits to be maintained, there must be banks. And for banks to make profits, they must buy assets off the deposit liabilities, leading optimal assets – liabilities time mismatch management.

My opinion :)

My Response:  You are reading that quote literally. Bill is not saying you do not need Banking. He is saying you do not need banks to do that. In China, you can do all banking services on WeChat which does not have a banking license. Bill was saying, those things can happen, but they must not be done by banks.