Square to close $200m funding round

Square to close $200m funding round

Square is on the verge of closing a $200 million funding round that would value the dongle and app-based mobile card reader startup at $3.25 billion, according to the New York Times.

The round will be led by Suhail Rizvi from private equity firm Rizvi Traverse Management, which has previously invested in Square chief Jack Dorsey's other company, Twitter, says the Times, citing sources.

The new money suggests that Square has doubled its value since raising $100 million in a round valuing it at around $1.6 billion a year ago but the firm had been seeking investment at the $4 billion mark, says the Times.

Since launching in late 2010, Square has seen huge growth and now claims around two million users for its dongle and app system that enables merchants to accept card payments using smartphone. The startup predicts it will process $6 billion in payments this year.

However it faces increasing competition, with established players such as PayPal, Intuit and Verifone all offering similar products and other rivals such as Google and the Isis consortium of telcos bidding to take cards out of the equation through mobile wallets and contactless payments.

Square though is bullish on its prospects, with head of strategic planning and analysis Steve DeWald taking to Quora last week to dismiss PayPal as a challenger and potential partner.

Responding to a question asking if PayPal has approached Square about an acquisition, DeWald was scathing about the eBay unit, saying: "I don't think we would ever consider working with PayPal in any capacity. Our cultures are too different and fundamentally incompatible. Square still has the mentality of a startup...PayPal is a part of the problem. They're just another card processor that doesn't care about their customers."

Comments: (3)

A Finextra member
A Finextra member 25 July, 2012, 16:23Be the first to give this comment the thumbs up 0 likes

Steve DeWalds comments are very reminiscent of Martha Lane Fox - whos company took years to eventually break even.... If paypal are part of the problem - then its a problem for Square - not PayPal. I think Squares valuation is similar to that of Facebook - rather over hyped,

Nick Green
Nick Green - ISD Consultants - Northampton 26 July, 2012, 11:15Be the first to give this comment the thumbs up 0 likes

Am I missing something here. The US is moving to EMV so face to face fraud in the US will migrate to Square Retailers - why would you buy into that?

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 27 July, 2012, 09:03Be the first to give this comment the thumbs up 0 likes

With its candid - and, IMO, very true - comment about PayPal, SQUARE implies that it cares for its customers. I hope it lives up to this claim by refraining from putting arbitrary freezes on merchant accounts.