Stripe is one of the most popular online payment processors in the world. Since its launch in 2010, the platform has remained a pioneering force in the e-commerce sector. Today, Stripe is a prominent innovator in the digital economy, enabling clients to integrate advanced payment solutions such as crypto payments securely from their software solutions. The company’s unique features and first-mover status have made it one of the most highly anticipated IPOs ever. Here’s everything you need regarding how to buy pre-IPO shares in Stripe.
What is Stripe?
Stripe provides secure online payment processing and commerce solutions to a wide array of clientele. It was founded by two brothers, John and Patrick Collison, who sought to provide software as a service (SaaS) payment solutions internationally. Only a few years after its launch, the company introduced its payment processing solutions to the market.
These features enabled businesses to accept payments online, in person, and using alternative payment methods. This flexibility helped the company expand operations quickly, opening headquarters in San Francisco, CA, and Dublin, Ireland. Today, the company also has offices in the UK and Tokyo, offering a wide range of financial services and payment solutions.
Notably, Stripe services were designed to be easy to integrate into legacy systems via a secure API and other options. Users can leverage unique support services like Atlas that enable firms to access lending capital. There are also proprietary tools for connecting to traditional financial systems, developing applications, and verifying customer identities.
Historical Funding Rounds
Summary of Stripe Funding:
- Total Funding: Stripe has raised $9.81B across 24 funding rounds.
- Largest Round: Stripe’s largest funding round was a Series I round held on March 15, 2023, that secured $6.87B.
- Investors: A total of 116 investors backed Stripe
- Latest Round: Stripe’s latest funding round was a Series I round held on April 08, 2024, that secured $694M.
Funding Rounds Breakdown:
- 2 seed rounds
- 2 early-stage rounds
- 19 late-stage rounds
- 1 debt
Key Investors:
Stripe has support from some of the most successful names in the market, including Elon Musk, Peter Thiel, Liam Casey, Sequoia Capital, Andreessen Horowitz, and Elad Gil.
Funding Data sourced from Tracxn
Why Invest in Pre-IPO Shares of Stripe?
There’s a plethora of reasons why someone would want to invest in Stripe. For one, it’s one of the most profitable and well-known payment processors globally. The company has been a leader in driving the e-commerce movement and is considered by many as an instrumental component of the digital economy. Currently, Stripe has clientele in more than 120 countries, including some of the biggest names in tech like Slack, Google (GOOGL +2.4%), Amazon (AMZN +1.43%), and Shopify (SHOP +4.43%).
Interstingly, Stripe saw an increase in demand for its services during the COVID-19 pandemic, as much of the world had placed lockdowns on their communities, which left online commerce booming. Stripe was perfectly positioned to capture this momentum. From there, the company introduced a host of features that helped to create an all-inclusive payment infrastructure.
Stripe Partnerships
Stripe secured partnerships with some exclusive clientele during its operations including tech giants Apple(AAPL +2.14%), Google, Alipay, Tencent, Facebook (META +3.44%), and Twitter. In 2015, the company was one of the first to work with VISA (V -0.52%) to drive online payments. It’s also got a lot of government support. Specifically, the Ireland Strategic Investment Fund invested $50M into the company, strengthening investor confidence in the project.
Stripe also announced a strategic partnership with Adyen and Capital One Bank this year. According to company documents, the group will work together to implement new anti-fraud measures designed to prevent losses and protect consumers.
How to Buy Stripe Pre-IPO Shares
Stripe is one of the most valuable tech companies in the world. As such, investors are eager at any chance to swoop up company shares. However, Stripe remains privately held, meaning that you will need to utilize a specialized approach to get access to shares. Here is what you need to consider.
1. Pre-IPO Secondary Marketplace
Secondary markets are purpose-built exchanges that connect pre-IPO shareholders with potential investors. These marketplaces can offer these assets because they work closely with employees, early-stage investors, and venture capitalists, which are crucial to the company’s pre-IPO growth.
Investing in pre-IPO shares for Stripe could open the door for additional ROIs if the company’s valuation is less than when its IPO launches. It’s common for company valuations to increase following an IPO. As such, it makes sense to add pre-IPO shares to your portfolio before the firm announces plans to go public.
Secondary marketplaces have many requirements. Here are some concerns you should be made aware of:
Eligibility: You to be an accredited investor to qualify for this investment, meaning you will have to show at least $1M in liquid assets to qualify.
Liquidity: Pre-IPO shares can’t be traded like regular shares. They can include lockup restrictions that prevent you from trading them before the IPO. Some firms have permanent “no sell” clauses that prevent any transfer of the shares following your investment.
Linqto is a reputable investment platform that connects accredited investors with pre-IPO shareholders in a secure manner. The network streamlines pre-IPO investing via an easy-to-navigate interface that provides access to all relevant data at a glance. Accredited investors seeking pre-IPO shares in Stripe should consider Linqto.
Visit Linqto →
2. Private Equity Firms
Private equity firms gain access to pre-IPO shares during investment rounds. They then offer these shares to high-net-worth accredited investors with a commission. Notably, private equity firms are known to have extra stipulations, including blocking the sale of shares for years in some cases.
3. Employee Equity Sales
Many consider employee equity sales the best way to acquire pre-IPO shares in Stripe. This method of acquiring shares requires you to connect with former employees. It’s common for companies to issue shares as part of an incentive package, leading to more pre-IPO share opportunities for investors.
Private Transactions: You will need to jump through some hoops to complete a private pre-IPO transaction, including creating specific legal agreements, conducting valuations, and setting in place any limitations on the transfer of the asset.
Brokerage: Brokers will take a lot of the confusion out of the pre-IPO process. These professionals can guide you through each step, ensuring full compliance and avoiding common errors untrained professionals make.
There are several risks that you should consider before jumping into the pre-IPO shares investment arena. Here are the top concerns:
Liquidity Risk
If you are looking for an asset that you can sell right away, pre-IPO shares are not the best option. These investments can include sales and transfer clauses that prevent the transfer of the asset until certain criteria, such as the IPO’s completion. It’s even common for pre-IPO shares to require you to wait years before gaining the ability to sell your assets.
Regulatory Risk
The blockchain market has seen considerable scrutiny from regulators and lawmakers. While the technology is far better understood than in its early days, many lawmakers still see it as a threat to the traditional financial system. As such, you need to always consider how new regulations could affect the value of your pre-IPO shares.
Market Risk
Purchasing pre-IPO shares in Stripe means that you stand behind the project and its team. The company has secured a reputation for excellence and has previously expressed a desire to go public. However, no concrete data has been provided yet. As such, it’s vital to understand that the market is an active space that experiences strong fluctuations that could result in a different share value between now and any future IPO launch.
Valuation of Stripe and Future IPO
Stripe vocalized its plans to go public after filing with the SEC in 2021. However, there hasn’t been much news since and no exact date has been announced for what many see as potentially the largest IPO in history. Since its launch, Stripe’s value has skyrocketed from $1.75B in 2014 to $50B in 2023. Impressively, the trend is set to continue as Stripe’s valuation was $70B as of July 15, 2024.
Some analysts believe that due to Stripe’s massive funding rounds, it may forgo a public IPO. If this is the scenario, the firm would offer shares to employees as part of the new strategy. Demand for these shares is through the roof as many see stripe as a vital component of the Web3 economy, connecting decentralized assets, traditional banks, and new users securely.
If Stripe announces an IPO date, it will be one of the largest offerings ever. The company has support from the biggest and brightest names in tech and finance. Additionally, it is positioned across multiple fast-growing sectors. From the looks of it, Stripe will continue to expand its network and influence as the world shifts towards the digital economy and more businesses learn about the firm’s offerings.
Conclusion
If you are one of the investors lucky enough to get your hands on Stripe pre-IPO shares, it’s wise to hold them as there could be significant growth potential. Stripe is established and positioned well in the digital economy. It has the financial and legal support needed to grow, and its innovative approaches are at the forefront of payment processing tech. These factors make it a smart idea to secure some pre-IPO shares of Stripe.
Investing in pre-IPO shares requires you to conduct research. You should personally evaluate the company’s financial history and offerings. Additionally, it’s recommended that you consult with a financial professional to ensure that you remain within your risk tolerance and goals. For those who meet this criteria, Strip Pre-IPO shares could open the door for future ROIs.
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