Fintech: Stripe Raising Funds To Buy Employees’ Shares And Cover Their Tax Bill

March 7, 2023 | FinTech, Latest News, News

Stripe is said to be discussing a valuation of $50 billion for the raise, down from $95 billion.

Stripe, a payments company, plans to use the funds it raises in its latest round of fundraising to cover a $3.5 billion tax bill. The company is aiming to raise $2.3 billion to cover tax withholdings in Q1 and an additional $500 million and $700 million in taxes later this year and next year respectively, according to a Bloomberg report.

About $600 million will be used to cover costs of taxes tied to employees’ options.

Stripe is also planning to organize a tender offer to allow early employees to sell at least some of their shares.

The fund raising has been in process since January, when Stripe appointed Goldman Sachs (NYSE: GS) and JPMorgan Chase (NYSE: JPM) to examine various funding options. However, Stripe has stuck to the line that the proposed funding is not needed for its normal business operations.

Stripe instead has a problem with stock options that will soon expire for some of its earliest employees. Moreover, the company is unable at the moment to hold an IPO which employees with vested stocks could use to sell out. The employees expect to use the sale proceeds to meet their tax liabilities.

Therefore, the twin primary reasons for Stripe to raise funds are one, to cover the tax bill that early employees will soon face, and second, to organize a tender offer to allow those staffers to sell at least some of their shares.

Stripe generated $14.3 billion in revenue and processed $816 billion in payments volume last year.

Related Story:  Payments Giant Stripe May Accept A Lower, $50B Valuation In Funding Round

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