While much of Silicon Valley spent the last two weeks skiing or otherwise reveling in all that money made this year from acquisitions, partial liquidations and secondary deals, Square founder Jack Dorsey was apparently hard at work. TechCrunch has learned that Square is in the process of closing a large round of funding. The company is being valued, we hear from multiple sources, at somewhere close to $200 million.
We don’t have confirmation on who did it, but we hear that Sequoia Capital was in the mix to lead this round, along with previous investor Khosla Ventures, Benchmark Capital and Kleiner Perkins. Our sources say Sequoia ended up on top and will lead the round.
A strategic investor is also likely to invest, sources say. Someone like Visa, Mastercard, or American Express.
Sequoia would be a seemingly strange fit. It’s not a firm known for doing later stage deals or for paying up on valuations. But lately the firm has deviated from that playbook with deals like Evernote and Tumblr.
We hear Square’s funding was a competitive round, but have also heard that several of the top firms we expected to be in the running had some concerns about the steep valuation relative to Square’s traction, despite admiration for Dorsey and the team. Payment companies are hard to build, with fraudsters trying to exploit it and big competitors trying to run you out of the market. Square has become a media darling and has attracted an enviable team — including Keith Rabois who went through all this with PayPal– but market traction has been more elusive. It could still be a company that is so transformative it moves America’s GDP as Newsweek breathlessly anticipated a year ago, but there’s a lot of work to do first.
Still, Square is processing millions of dollars a week in transactions, and we hear they’re closing in on a million dollars a day.
This has the earmarks of one of those deal that VCs look back on in ten years and say “I told you so!”– we just don’t which side of the debate will have the bragging rights.
Square is a revolutionary service that enables anyone to accept credit cards anywhere. Square offers an easy to use, free credit card reader that plugs into a phone or iPad. It’s simple to sign up. There are no extra equipment, complicated contracts, monthly fees or merchant account required. Co-founded by Jim McKelvey and Jack Dorsey in 2009, the company is headquartered in San Francisco with additional offices in Saint Louis and New York City.
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