PayPal winds down venture arm as new CEO slashes costs by $1.5B

PayPal is shutting down its decade-old venture capital unit and exploring sales of portfolio stakes, the deepest cut yet in new CEO Enrique Lores's campaign to reverse a 30% stock decline and save $1.5 billion.

PayPal is winding down PayPal Ventures, the corporate venture arm it established in 2016 after the eBay spinoff, according to five people familiar with the matter. The unit's headcount has fallen to two from more than 10 in late 2025, and the fintech has hired Jefferies to explore selling some positions on the secondary market, one person said.

"As part of our continued efforts to sharpen our focus, we are exploring strategic options for our corporate venture capital arm, PayPal Ventures," a company spokesperson said. The unit has deployed more than $850 million across three funds into over 80 companies, including Plaid and crypto custodian Anchorage Digital. Its portfolio contributed 10 cents to PayPal's $1.53 earnings per share in the fourth quarter of 2025, compared with a loss of four cents a year earlier.

The venture wind-down is the latest move by Lores, the former HP chief executive who took over in February after the board ousted Alex Chriss. During Chriss's nearly three-year tenure, PayPal's stock dropped more than 30% as the company lost ground to Stripe and Apple Pay. Lores has since separated Venmo into its own business vertical, reorganized the company into three units, and targeted a 20% workforce reduction over the next two to three years — roughly 4,700 of 24,000 jobs.

The Cost-Cutting Math Behind Lores's Turnaround

PayPal generated $33.2 billion in revenue in fiscal 2025, up 4.3% from a year earlier, with net income of $5.2 billion and a net margin of 15.8%. But branded checkout — the core business of processing payments directly through PayPal's technology — has lagged investor expectations, prompting the company to streamline operations. Lores said in a May earnings call that PayPal needs to accelerate "AI adoption" and "recommit to the fundamentals," targeting at least $1.5 billion in savings over two to three years.

The company's stock, which traded near $78 a year ago, has fallen to about $42, giving it a forward price-to-earnings ratio of 8.2 times — a steep discount to the sector benchmark of 37.6 times. Rival Block, by contrast, trades at 6.5 times forward earnings but has been gaining share in small-business payments, according to Morgan Stanley.

Competitive Pressure From All Sides

PayPal's restructuring comes as it faces threats from multiple directions. Stripe has reportedly expressed interest in acquiring all or parts of PayPal, while Block's Square is winning mid-market merchants through expanded sales distribution and product improvements, Morgan Stanley analysts wrote in a May note. William Blair analysts said new leadership "will struggle to improve branded performance," adding that "splitting the company apart remains the best path to shareholder value creation."

The venture arm's closure also signals a broader shift in how large fintechs approach innovation. Google and Microsoft maintain significant corporate venture units, but PayPal's decision to exit venture investing suggests a more defensive posture — prioritizing cost savings and core business defense over strategic bets on emerging startups.

This article is for informational purposes only and does not constitute investment advice.