Europe’s most valuable private tech group Checkout.com has slashed its internal valuation to about $11bn, becoming the latest high-flying start-up forced to respond to the rout in tech stocks and falling investor sentiment.
The London-based group told employees last month of the valuation drop, according to people familiar with the move. Alongside that reduction, the company lowered the price at which staff can exercise their stock options. That cost had previously been set at about $252 a share, some of the people said. The level has now been lowered to about $65, two people said.
Checkout.com had secured a $40bn valuation in January from investors including US investment group Tiger Global, asset manager Franklin Templeton and Singapore’s sovereign wealth fund GIC. At that time, the $1bn funding round represented a tripling of the payment group’s valuation in just a year.
Slashing its internal price — which is separate from the investor-determined valuation — benefits staff by reducing the cost of their company equity. This gives employees scope for further gains in the case of future deals such as an initial public offering. Other start-ups including Stripe and Instacart have undertaken similar moves in recent months.
The reassessment also signals how rising interest rates and faltering public technology stocks are filtering through to private markets. After pouring money into start-ups last year, venture capitalists have pulled back from further deals this year and pushed companies to focus on generating profits rather than pursuing growth at all costs.
“Checkout.com recently announced to our employees that we will align equity awards to an updated tax valuation that reflects the current macroeconomic conditions,” the company told the Financial Times in a statement.
“This gives our employees the opportunity to share more meaningfully in the potential economic upside as we continue to grow our business. We are focused on building and scaling a generation-defining business that enables global brands and their communities to thrive in the digital economy.”
Checkout.com was founded in 2012 by chief executive Guillaume Pousaz and processes payments to a variety of businesses across ecommerce such as Pizza Hut and Netflix.
The company has generated significant volume from its work with cryptocurrency groups such as Binance and Coinbase. Crypto exchanges have seen volumes plummet this year amid a broader drop in digital asset prices, while FTX collapsed into bankruptcy after an $8bn hole emerged in its balance sheet.
Since Checkout.com’s $1bn funding deal in January, technology valuations have plunged. European tech companies have seen more than $400bn in market value wiped out since the peak of the 2021 boom, as venture capital dealmaking hit a wall at the end of the summer. The funding crunch has hit fintech companies in the region, with the valuation of buy-now-pay-later group Klarna falling from $46bn to $7bn after a funding round in July.
Payments companies broadly have struggled this year against a backdrop of slowing ecommerce sales. Dutch rival Adyen has seen its stock drop about 40 per cent this year while US competitor Stripe cut its own internal valuation by 28 per cent in July.
Stripe also axed 14 per cent of its workforce in November as the company’s founders said they had been “too optimistic.” Checkout.com implemented its own lay-offs, cutting 5 per cent of its staff in September.