Sequoia is fronting a $205 million financing for Whop that values the company at $5.1 billion, inclusive of the new cash, with Shopify Inc.'s venture arm also participating. Whop plans to reveal the round on Wednesday.
Doug Leone, the former Sequoia leader who returned to active dealmaking this year, is taking a board seat. He put it plainly: "Rule one of making money is go where they ain't." He also cautioned, "If there's 50 venture firms chasing 12 Whops, it's not so good. Right now, everybody is chasing model companies." Leone's track record includes backing Wiz Inc. and Nu Holdings Ltd. Whop's prior backers span Peter Thiel, A-Star Capital (A*), Insight Partners, and Bain Capital Ventures.
Based in Palo Alto, Whop helps people launch, manage and scale their own ventures. The company started in 2021, built by founders who first connected as teenagers while creating software to track sneaker releases. CEO and co-founder Steven Schwartz says the platform channels young entrepreneurs into "hyper-niche" businesses that span services, e-commerce and more.
What shows up on Whop is eclectic by design: everything from a Canadian outfit handling emergency tree removal to playlist curators and even apps aimed at private jet chartering. Schwartz describes the offering as covering "everything from business creation, payment acceptance, advertisements, card issuance, and images and graphics."
The company's annualized revenue run rate has reached $400 million, up from a $60 million pace early last year. Most of its income comes from taking a cut of transactions processed by businesses on the platform, with a blended average fee of 6 percent, according to Schwartz.
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Whop rolled out its own AI models that suggest practical actions for business owners, like which customer group to target with ads or the most effective timing for a discount code. Users who choose these AI tools pay a small additional fee. The challenge now is staying essential and worth paying for as AI makes it easier to "vibe code" new ventures, potentially steering users to other software or leaving consumers swamped by choices.
Sequoia initially passed on Whop. Leone said the company later demonstrated that businesses on the platform were sticking around, growing, and spanning multiple categories. He is not worried about rivals, noting, "I don't remember the last time that I invested in a company that had patents to defend it." He added that defensibility comes from speed and securing a 90 day head start.
One clever tactic fueling growth: Whopathons on top U.S. campuses that prompt students to build on Whop over 48-hour sprints.
Whop plans to use the capital to add staff and open offices in Colombia and across Europe. This year it opened its first West Coast office in Palo Alto and shifted away from its original Brooklyn, New York headquarters.
For your portfolio, the takeaway is a fast-growing commerce platform attracting marquee venture support while monetizing both transactions and optional AI features. The round also marks a high-profile board addition in Leone, signaling continued appetite for businesses that are scaling outside the core AI model dogpile.
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