Varo, Stripe said to be raising new funds at much lower valuations

With 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.

The startup last August celebrated the two-year anniversary of obtaining its national bank charter -- a move that made it the first-ever all-digital nationally chartered U.S. consumer bank. In an interview with TechCrunch, CEO and founder Colin Walsh last September insisted that the company was “still seeing strong customer growth” and still had “a clear path to profitability.”

TechCrunch reached out to inquire about whether or not Varo has in fact signed a term sheet for a new $50 million raise -- with Warburg Pincus ponying up $25 million -- but the company declined to comment.

Also this week, The Information reported that payments giant Stripe is still trying to raise capital and is now believed to be targeting a valuation of around $50 billion, or $20 per share, after hitting some obstacles. Earlier this year, TechCrunch reported that Thrive Capital was said to have committed $1 billion in fresh capital to Stripe as part of a new investment in the works that would have valued the fintech company at between $55 billion and $60 billion.

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.”