Palo Alto-based startup Whop has raised $205 million in a new funding round that values the company at $5.1 billion, as it looks to expand its platform for people starting and running online businesses. Sequoia Capital led the investment, with participation from the venture arm of Shopify Inc., the company plans to announce Wednesday.
The funding comes as Whop reports strong revenue growth. Co-founder and CEO Steven Schwartz said the company has crossed $400 million in annualized run-rate revenue, compared with $60 million at the beginning of last year. The increase highlights how quickly the platform has grown as more entrepreneurs use it to launch and manage businesses.
Whop was founded in 2021 by three entrepreneurs who met as teenagers while developing software to track sneaker releases. What started as a project connected to the sneaker market has since grown into a platform that supports businesses across several industries.
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Users can use Whop to build and operate different types of businesses, including e-commerce stores, online services and mobile applications. The businesses on the platform range from music playlist curation services to apps that help people arrange private jet charters. One business listed on the platform offers emergency tree removal services in Canada, showing how varied its users’ ventures have become.
Whop makes most of its revenue by charging business owners a percentage of the transactions processed through its platform. Its blended average fee is about 6%. This model allows the company to earn money as businesses using its services generate sales.
The latest funding round also brings Doug Leone, the former head of Sequoia Capital, onto Whop’s board of directors. The investment marks Leone’s first deal since returning to an active investing role earlier this year. His previous investments include Wiz, a cloud security company, and Nu Holdings, a financial technology company.
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Sequoia’s decision to back Whop is notable because the investment firm had previously declined to invest in the startup. Leone said the firm changed its position after seeing that businesses using Whop were growing and operating across a wide range of industries rather than leaving the platform.
The ability to attract and retain businesses appears to have played an important role in Sequoia’s decision. Instead of relying on a single category of online business, Whop has built a platform that supports entrepreneurs with different products and services. This range gives the company access to a broader group of business owners and customers.
Whop has also attracted several prominent investors in earlier funding rounds. Its existing backers include billionaire investor Peter Thiel, A-Star Capital, Insight Partners and Bain Capital Ventures. The latest investment from Sequoia and Shopify’s venture arm adds to that group as the startup seeks to build on its rapid growth.