In 2021, Stripe was valued at $95 billion. In 2023, that dropped to $50 billion - a 47% haircut.By 2024-2025, it recovered to $70B+.This volatility - happening entirely in private markets - offers crucial lessons for anyone investing in pre-IPO companies. For more case studies, see how some IPOs destroyed value by going public at the wrong time.
The Stripe Timeline2010-2015: Building phaseFounded by Patrick and John CollisonYC-backed, then raised from Sequoia, AndreessenBecame the default payments API for startups2016-2020: Scale phaseExpanded beyond startups to enterpriseLaunched Atlas, Terminal, TreasuryValuation grew from $5B to $35B2021: Peak phaseZIRP (zero interest rate) maniaFintech valuations explodedStripe hit $95B valuation2022-2023: CorrectionInterest rates roseFintech multiples compressedStripe internally marked down to $50B2024+: RecoveryRevenue continued growing (40%+ CAGR)Profitability improvedValuation recovered to $70B+
What Investors LearnedLesson 1: Entry Valuation MattersInvestors who entered at $95B are still underwater. Those who entered at $5B are up 14x even after the correction. Entry price determines returns more than company quality. Learning how to calculate startup valuations is crucial for getting entry right.Lesson 2: Markdowns Aren't FatalA 50% markdown sounds devastating but for long-term holders, it's noise. Stripe's business kept growing. Patient capital recovered.Lesson 3: Private Markets Have Volatility TooPrivate markets seem stable because valuations don't update daily. But the volatility exists - you just don't see it until funding rounds or tender offers. For more on how to navigate this, see how to calculate startup valuations.Lesson 4: Fundamentals Eventually WinStripe's revenue growth never stopped. When valuations finally reflected fundamentals instead of speculation, the business proved itself.
Who Won and LostWinners:Early investors (2010-2018): 10-100x+ even after corrections2023 tender buyers: Got in at $50B, now at $70B+ (40% in 1-2 years)Employees who held through: Equity still worth significant amountsLosers:2021 peak buyers: Still underwater on paperEmployees who left post-correction: Exercised options at lower valuationsPanic sellers: Locked in losses that have since recoveredThe pattern: patience and entry price mattered more than being "right" about Stripe.
Applying This to Other DealsStripe's experience applies broadly:Be Valuation ConsciousEven great companies can be bad investments at wrong prices. Don't chase hype rounds.Prepare for VolatilityYour private investments will have mark-to-market swings. Budget for this emotionally and financially.Focus on FundamentalsIs the company growing revenue? Building competitive moats? The valuation eventually follows fundamentals.Have Long Time HorizonsPre-IPO investing isn't for people who need liquidity in 2-3 years. Think 5-10+ years.
The Current OpportunityPost-2023 markdowns created opportunity:Valuations are more reasonable than 2021Companies that survived are battle-testedLess competition from speculative capitalPlatforms like IPO Genie can help identify quality deals at sensible valuations using AI-powered analysis.Related: Understanding Valuation | Pre-IPO Investing
Why This Matters for YouStripe's rollercoaster demonstrates that private market investing isn't a smooth ride. Even the best companies experience significant valuation swings. The investors who win are those who: enter at reasonable valuations, maintain long time horizons, and don't panic sell during corrections.The current post-2023 environment offers more reasonable entry points than the 2021 peak. If you're considering pre-IPO investments, this history should inform your approach: be patient, be valuation-conscious, and be prepared for volatility you won't see in real-time.
Frequently Asked QuestionsQ: Is Stripe a good investment now?At $70B, it's no longer the bargain it was at $50B. But for a company doing $20B+ revenue with 40% growth, it could still have upside to $150B+ at IPO. Depends on your time horizon and entry price.Q: How do I know if a private company is overvalued?Compare to public market comps. If private valuations are 2-3x public peers on revenue multiples, be cautious. Use valuation frameworks rigorously.Q: Should I wait for corrections to invest?Timing private markets is nearly impossible. Better strategy: diversify across multiple deals and time periods to smooth out entry point risk.Q: How long should I expect to hold a pre-IPO investment?Plan for 5-10 years minimum. Companies are staying private longer, and forced sales during corrections lock in losses. Only invest capital you won't need for a decade.
