Varo, Stripe said to be raising new funds at much lower valuations
Reading Time: 2 minutesWith the market turning so dramatically in 2022, it’s no surprise that many startups are now believed to be raising down rounds.
This week alone, it was reported that Varo was raising a $50 million equity round led by Warburg Pincus at a ‘significantly’ lower valuation. According to Fintech Business Weekly, the struggling neobank would be raising the funding at a pre-money valuation of $1.8 billion. That’s down from the $2.5 billion that Varo was valued at in September of 2021 when it raised a massive and ‘oversubscribed’ $510 million Series E.
Initially, it was thought that Stripe was seeking to raise $2 billion, but the number is now believed to actually be closer to $2.5 billion to $3 billion, according to reports from The New York Times and The Information. In an unusual twist, Stripe is believed to be raising new funds to, as The Information reported, ‘address the issue of expiring restricted stock units for some of its veteran employees — and a massive employee tax bill that will likely come with it.’
In a phone interview on January 27, he told me that it is ‘highly unusual for investors to be excited about a new round that is primarily going to pay unpaid taxes.’
Either way, the fact that fintech startups — or any startups for that matter — are raising down rounds is not the big news that it might have been a year ago. When faced with either shutting down or raising a down round, most startups would opt for the latter.
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Ref: techcrunch
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