Payments giant Stripe plans to use its latest funding round to pay about $3.5 billion in tax bills

Stripe, one of the most highly valued startups in the world, recently told investors that it plans to use money from its latest funding round to help pay a roughly $3.5 billion tax bills, according to reports this morning.

Stripe said it plans to raise about $2.3 billion at a valuation of $55 billion to pay a withholding tax in the first quarter, according to a recently disclosed investor filing.


Stripe plans to withhold another $500 million in taxes later this year and another $700 million next year.

Stripe also plans to spend $600 million to cover tax costs related to the exercise of employee options, according to a presentation to investors via Goldman Sachs. Stripe declined to comment. Goldman has yet to respond.

The document describes the total amount Stripe plans to raise in the coming weeks. Stripe launched its funding in January when it hired investment banks like Goldman Sachs and JPMorgan Chase to evaluate various options, such as funding and stock market listing.

Throughout the fundraising process, Stripe has maintained that it does not need to raise cash to fund its day-to-day business operations.

The main purpose of corporate financing is to solve the problem of the “Double Trigger Restricted Stock” for employees. Over the years, Stripe has issued these locked shares to attract and retain talent.

Recently, however, the capital markets have been closed for several months, making it difficult for Stripe to launch a public offering.

Now, the company faces a looming problem: Restricted stock held by early Stripe employees could soon expire unless the board waives the second trigger condition for restricted stock.

But when they do, Stripe employees suddenly face a higher personal tax burden and can’t pay their taxes by selling their stock.

According to the filing, Stripe had two goals in its latest funding round: to raise enough money to pay a looming tax bill for its early employees, and to organize a buyout offer to buy back at least some of those employees’ shares.

Stripe said in the filing, “The long-term trend of market share favors Stripe and other technologically leading competitors. The growth of payments is not a zero-sum game.”

As a payment processor for Internet companies such as Shopify and Instacart, Stripe is seen by investors as a bellwether for Silicon Valley as a whole. Stripe last raised money in early 2021 at a valuation of $95 billion.