👉 Background: Stripe, which started back in 2010, is a payments processing platform which processed more than $1 trillion USD through its platform in 2023. Since its launch, Stripe has raised more than $8.7 billion USD, including at a valuation of $95 billion USD in 2021, before it dropped to $50 billion in 2023.

👉 What happened: Now, Sequoia Capital, the VC fund and one of Stripe’s earliest investors is looking to buy up to $861 million USD worth of Stripe shares from its earliest investors.

👉 What else: The interesting part is that Sequioa's latest fund will purchase these shares from Sequoia limited partners who invested in Stripe between 2009 and 2012. And this is a way for its earlier investors to get some liquidity on their investments from more than 12 years ago.

What's the key learning?

💡VCs are trying to create new ways for older investors to liquidate their shares that are stuck in older investments. The traditional model for VC is:

• VC raises money from investors (known as limited partners)
• VC invests that money into startups
• The startup sells out via an IPO or a strategic sale within 5-8 years
• VC's limited partners liquidate their investment and generate a profit

💡The challenge for Stripe is that there aren’t many other companies that can afford to acquire them for $70 billion USD and the founders prefer to keep Stripe as a private company indefinitely.

💡In fact, 37% of "unicorns" are being held for at least nine years by VC funds including 13% that are past the 12-year mark. So, Sequoia is creating new ways for older investors to liquidate their shares in older investments. If this is successful, it could become a template for how Sequoia and other VCs handle other big, private companies in the future.