BankTech

Using The Jumpstart Our Business Startups Act for The Confidential IPO of Square

Prosper MarketplaceEmail Marketing Manager

According to internal sources, it has come to light that San Francisco’s payments startup, Square Inc., is confidentially filing for its initial public offering (IPO) under the Jumpstart Our Business Startups Act. This act allows companies generating less than $1 billion in annual revenue to file IPOs under the US Securities and Exchange Commission confidentially. Sources also reveal that Square has been working with Morgan Stanley, JPMorgan Chase & Co. and Goldman Sachs Group Inc. for the IPO.

Square Inc. offers financial services, credit card reading/swiping devices and technologies, and payments solutions to businesses and individuals. Founded in 2009 by Jack Dorsey, interim CEO of Twitter Inc., Square processed nearly $30 billion in payments from its credit card transactions from millions of merchants.

Sources reveal that Dorsey is Square’s largest stakeholder with 26.2% shares. Other major investors include Co-founder James McKelvey and Khosla Ventures. In the fast-growing FinTech and payments industry, it is necessary for Square Inc. to have continuous capital. It is broadening the range of services it offers. Recently, Square Inc. started offering loans to merchants through Square Capital, which allows merchants to pay back through sales processed by Square’s credit card reading devices. It has also started offering employee management and payroll services to businesses in California in June 2015 and it will expand to other states in the country very soon.

According to an article in The Wall Street Journal, investors can benchmark the public market value for Square Inc. on the basis of the PayPal Holdings Inc.

Square recently (March 2015) secured additional outside investments to expand its popular small business financing program, Square Capital. With Square Capital’s first investor, Victory Park Capital, tripling its original investment, and with new money from investors including Colchis Capital, Square will be able to advance hundreds of millions of dollars this year to a wide array of businesses, many of whom have been neglected by traditional financial institutions. Using data-driven insights, Square Capital has extended more than $100M to over 20,000 independent businesses since launching last year.

In the past Square has constantly looked at adding more value-added services to its portfolio, so as to keep its head above waters. It launched a scheduling and booking system, email marketing tools and a small business loan programme, the Square Capital last year.In addition to these, it has scheduling, inventory management and invoicing in its basket of reasonably-priced products aimed at the small-business segment. It even bought food delivery service Caviar and then another startup Fastbite to compete in the local food delivery service segment with a service called Caviar for customers in San Francisco.

However, not all its services have hit the mark. Its consumer-facing products like the Square Wallet, (which just required customers to give a merchant their name to pay for items) and Square Market (for businesses to create an online storefront) are now resting in the background.

Aboli Gangreddiwar

Prosper MarketplaceEmail Marketing Manager

Aboli is a marketing specialist and a FinTech analyst based in Charlotte, North Carolina. Her FinTech articles bring together her research skills and industry knowledge. Having been an observer of the technology space and the start-up ecosystem in the Silicon Valley for more than a year, she likes to analyze and write about exciting and innovative companies in the payments and commerce industry.

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