Latest / The Startup Exit Podcast with Fexingo: IPOs, Acquisitions, and Founder Liquidity Events / The IPO That Wasn't How Stripe Became a Liquidity Machine
Transcript
- Lucas: Stripe last week completed another tender offer — its fourth in three years — letting employees and early investors sell shares at a valuation just shy of sixty-five billion dollars. And if you are a founder building a company right now, that number should make you stop and think. Luna: Wait — sixty-five billion and they still haven't gone public? That valuation is bigger than most companies that have. Why would they keep choosing this route? Lucas: That's the exact question. Stripe is the defining counterexample to the traditional IPO narrative. They've created a liquidity machine that lets insiders cash out without the regulatory burden, the quarterly earnings pressure, or the stock price volatility of a public listing. Luna: So they've essentially built their own private secondary market. How does that actually work for the average employee who wants to sell? Lucas: The company runs a tender offer — usually a two-to-four-week window where current and former employees can elect to sell a portion of their vested shares. Stripe sets a price, institutional buyers like Sequoia or mutual funds agree to purchase, and the company collects a small transaction fee. The employee gets cash, the company retains its private status, and the buyers get access to a high-growth asset they couldn't touch on the public markets. Luna: And the pricing in this latest round — sixty-five billion — that's down from the ninety-five billion peak in 2021, but it's still a massive number. What does that tell you about how the private market is valuing fintech right now? Lucas: It tells me that serious institutional money sees Stripe as a long-term compounder. The ninety-five billion was frothy — that was peak zero interest rate era. The sixty-five billion is more grounded. It's roughly eighteen times projected 2026 revenue of about three point six billion. Compare that to public fintech companies like Shopify, which trades at about eight times revenue. The private market is still giving Stripe a premium for growth and for staying private. Luna: That premium is interesting because it cuts against the conventional wisdom that companies go public to get a higher valuation. Stripe seems to be getting a better deal staying private. Lucas: Exactly. And look at what's happening in the broader market today. The ARK Genomic Revolution ETF, ticker A-R-K-G, jumped over nine percent in the last week. That's biotech — a sector where companies often feel enormous pressure to IPO because they need public capital to fund long clinical trials. But the ARKG move is really about a few names showing positive data. The point is, the IPO window is still choppy. If you are a biotech founder, you might look at Stripe and think, 'Why would I rush to go public when I can create liquidity privately on my own terms?' Luna: But Stripe is unusual — it has massive revenue, incredible margins, and a brand that institutional buyers covet. Can a smaller startup replicate this model? Lucas: It's harder, but it's not impossible. A growing number of platforms — Forge Global, EquityZen, CartaX — now enable private companies to run their own tender offers even at smaller scales. I've seen companies as small as fifty million in annual recurring revenue do secondary transactions for key employees. The key is having a clear valuation signal and a group of willing buyers. Luna: And that's where the founder's decision gets complicated. If you run a tender offer, you are effectively setting a price — and that price becomes the reference point for everyone: employees, investors, future hires. If the market turns and the next round is lower, you face a down-round dynamic, which can crush morale. Lucas: Right. And Stripe has managed that carefully — they've never done a down round. Each tender has been at or above the previous one. That takes discipline. It also takes a business that consistently grows into its valuation. Not every company has that luxury. Luna: So for a founder listening who is maybe two or three years from an exit, what is the practical takeaway? Should they be planning a tender offer now? Lucas: I think the takeaway is: start thinking about liquidity as a tool, not just an event. Too many founders treat an IPO or an acquisition as the only exit button. But your early employees have been taking below-market salaries for years. If you can give them a liquidity event at year four or five, you retain them longer and you build a culture of ownership that actually pays off. Luna: And that retention piece is huge. I've talked to founders who lost key engineers because the company stayed private for eight years and those engineers wanted to buy a house or start a family. They couldn't wait for the IPO. Lucas: Exactly. Stripe's approach signals to employees: 'We see you, we value your contribution, and we're not going to make you wait a decade to realize it.' That's a powerful recruiting message, especially when you're competing with public companies that offer RSUs that are liquid immediately. Luna: So if today's conversation was useful to you — especially if you're a founder or operator thinking about how to create liquidity for your team — these episodes stay ad-free because of listener support. You can find that at buy me a coffee dot com slash fexingo. Lucas: Yeah, that's exactly right. It's a small gesture that keeps this independent and focused on the stuff that actually helps you build. Appreciate everyone who's chipped in. Luna: Alright — back to Stripe. One thing I find fascinating is that Stripe has essentially become a shadow public company. It files its own financial disclosures with the SEC voluntarily, it has a board with independent directors, it even has a stock price that trades on private markets. How is that different from being public, really? Lucas: The difference is mainly regulatory and cultural. They don't have to comply with Sarbanes-Oxley in the same way, they don't have to host quarterly earnings calls with analysts, and they don't have to worry about activist investors building a position. They can still make long-term bets — like their push into embedded finance and banking as a service — without the market punishing them for a quarter of slower growth. Luna: But at some point, don't their early investors want an exit? Sequoia has been in since 2012. They can't hold forever. Lucas: They can sell in these tenders too. In fact, the last few rounds have included significant secondary sales from early backers. Sequoia and Andreessen Horowitz have both trimmed their positions. That's the beauty of the model — it provides exit liquidity for everyone, not just employees. And as long as there are buyers willing to pay a premium for private shares, the company can keep that going indefinitely. Luna: Indefinitely is a strong word. What happens if the fintech market cools and those buyers disappear? Lucas: Then Stripe would have to either lower the price in a tender — which it has resisted so far — or finally go public. I think the IPO is still on the table for 2027 or 2028, but only if the private market dries up or if they need a public currency for a major acquisition. For now, they have no reason to rush. Luna: So the lesson for founders might be: build a business that is so good that private capital comes to you, on your terms. Stripe has done that. The question is how many others can. Lucas: That's the challenge. Stripe is the exception that proves the rule. But the rule itself is changing — and that is what makes this moment so interesting for anyone thinking about their own exit.