One, they are expecting that it will become difficult to raise money in the future and they are not yet profitable.
That implies they do not see an IPO in their future.
Two, they have been doing this a long time and some of their early investors/execs want a bit of liquidity, and since they haven't (or can't) offer shares to the public, they are using a private markets to provide that liquidity.
Three, they are planning an IPO and some banker convinced them to do "one more round" in order to fill their coffers with some stock outside the stock they could buy as part of the deal to bring them to market. This is a hedge against a 'soft' IPO like Facebook's where the IPO shares available to the bankers were not able to be sold at a profit given the lack of a 'bump.' The hedge would work by them using that stock to sell into the IPO (at say $5B valuation) and thus 'lock in' their payoff without relying on the stock going up at all at the IPO.
IPO certainly not - it's extremely unattractive in the current regulatory regime (death of the IPO [1]). I wonder what their long-term strategy looks like given their margins can't be very high as a front-end for credit card companies.
"PwC also pulled together numbers on 2014’s global tech IPOs in the first nine months, finding that there have been 84 of them, with a total issue size of $43.7 billion. In comparison, there were only 64 last year, totaling $11.4 billion."
Nah, not quite. Public markets are red hot right now. Nasdaq is ~20% above all time high of '99 madness. IPO always was and always will be the best financing option down the road for great companies, Stripe included. Yes, there is a bit more regulation with SoX and such, and yes it's a bit more painful than it used to be back in the days, but some regulatory overhead makes not one iota of difference to a great company. Sure, middle of the road companies in VC's portfolios may not find IPOs as attractive as they were before and will exit through M&A.
As you can see from CEO's post a few above, these guys are nowhere near done, they have their work cut out for them in terms of expansion and accordingly a ton of growth prospects ahead. From that standpoint and because private funding is plentiful and attractive for a company of this profile, I agree - IPO is probably not the best choice at the moment [but you can read above post between the lines that they are heading there]. You see, in an IPO, they would need to sell a bigger chunk of the company to have a decent liquidity in the stock and private markets allow them to "right-size" the rounds. Also, the whole IPO process is a lot of work and bit of a pain and could be distracting from day-to-day business of running a rocket ship.
Yes, quite. Look at this chart[1] and animation [2].
You will find that there are almost no IPO's below 1B$ in the 2010's. What used to be the default option, became: stay private as long as you can. If Stripe is worth 3B$ now, what stops them from going public? Same for AirBnb (13B$ est) and Dropbox(10B$ est).
When looking at those charts, I would disregard the relative density during the IPO madness of '98-00, time when IPO was the default option for companies that should have never been public, to great retail investor fanfare, massive speculation, and ultimately untimely demise. Also, take out outliers (say Facebook and Google), periods of recession, adjust for inflation and all of the sudden, they don't look that much different (perhaps if you also squint a little or close one eye).
These charts only include tech, but there are other industries, too. For example, we had an explosion of IPOs in oil & gas LPs in the last couple of years. How is it not burdensome for a $250mm oil and gas LP to go public but it is for say $1bn tech company?
Make no mistake - there is nothing that would stop any of the companies you listed from going public (and I am pretty sure they will all be public in due time). For now, it is a matter of focus and choice. They all have access to great terms in the private markets. Given access to capital, it has always been more advantageous to stay private for as long as you can. For one, it allows you to focus on metrics that are relevant to your business (say nights booked or payments processed) and growth and not be distracted by GAAP measures and what equity analysts think you should measure. Also, there is no "stock ticker" distraction and a bunch of other reasons.
This all changes a bit when they get into the acquisition mode, as having liquid acquisition currency in form of publicly traded stock helps make bigger and bolder moves. It's also nice to give some liquidity to early employees as well.
While this dynamic may suck for growth oriented retail investors and mutual funds, I think it works well for the companies in question and at the end of the day - that's what really matters.
One, they are expecting that it will become difficult to raise money in the future and they are not yet profitable.
That implies they do not see an IPO in their future.
Two, they have been doing this a long time and some of their early investors/execs want a bit of liquidity, and since they haven't (or can't) offer shares to the public, they are using a private markets to provide that liquidity.
Three, they are planning an IPO and some banker convinced them to do "one more round" in order to fill their coffers with some stock outside the stock they could buy as part of the deal to bring them to market. This is a hedge against a 'soft' IPO like Facebook's where the IPO shares available to the bankers were not able to be sold at a profit given the lack of a 'bump.' The hedge would work by them using that stock to sell into the IPO (at say $5B valuation) and thus 'lock in' their payoff without relying on the stock going up at all at the IPO.
Take your pick.