Payments processor Stripe on Wednesday raised $6.5 billion in a funding round led by existing and new investors at a sharply reduced valuation of $50 billion, down nearly 50% from two years ago.

Stripe said it would use the cash to cover a large tax bill associated with stock granted to employees and to provide liquidity to employees.

About $3.5 billion of the newly-raised capital will be used to cover the tax bill, with the rest being used to buy shares from employees, according to a person familiar with the matter, who requested anonymity as these discussions were confidential.

The latest funding marks a steep decline in the valuation of the fintech startup, which was valued at $95 billion in March 2021.

Stripe said it did not need the new funds to run its business. Venture capital firms including Andreessen Horowitz, Baillie Gifford, Founders Fund, General Catalyst, MSD Partners, and Thrive Capital led the latest funding round, according to a statement from the company.

While Stripe still plans to eventually proceed with an initial public offering, that is unlikely this year, the person said.

Stripe had initially targeted a fundraising of about $4 billion, but ended up garnering more demand from investors than it initially anticipated, the person added.

New investors such as Singapore's sovereign wealth fund GIC, Goldman Sachs Asset and Wealth Management and Temasek also participated in the round, Stripe said.

After years of signing big checks for high-flying startups, investors have turned more cautious as the U.S. Federal Reserve's monetary tightening drains out excess liquidity.

Startup metrics such as profitability and cash burn are being scrutinized more closely. Last year, Swedish buy now, pay later giant Klarna also raised capital at a significantly lower valuation.

Stripe, which counts Amazon.com Inc, Ford Motor Co, Salesforce and BMW among its customers, has previously said it is aiming to turn profitable before going public.

Goldman Sachs served as the sole placement agent on the funding round. J.P. Morgan acted as a financial advisor to the company, Stripe said.

(Reporting by Niket Nishant in Bengaluru; Writing by Anirban Sen; Editing by Shounak Dasgupta and Jamie Freed)