Weekly Update #118: Square's IPO Filing

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Hello Investors,
Square IPO
Payments company Square, founded by current Twitter CEO Jack Dorsey, filed its S-1 with the SEC indicating its plans to IPO. Some interesting notes from the filing (which you can view here):
  • Jack Dorsey still owns 24.4% of the company, or 71 million shares. At the company's last private round (a $6 billion valuation), that stake is worth about $1.1 billion. Even more impressive: Dorsey is pledging 55 million shares (or ~19% of the company) to charity.
  • The company's last round of funding was a $312 million round in October 2014. Those Series E shares have a protection in place, known as a "ratchet", whereby they'll be issued additional shares of common stock should the IPO price at less than a 20% premium to the price they paid in 2014. If this sounds familiar, a similar situation arose with Box's IPO last January.
  • At the time of the $6 billion round, Square had generated trailing-twelve-month revenue of $765 million, resulting in a revenue multiple of 7.8x ($6B / $765M). As per the S-1, Square's last twelve months' revenue have eclipsed $1 billion. Assuming the same revenue multiple of 7.8x, we may expect Square's valuation to be pegged around $8 billion.
In Other News... 
Venture Outlook 2016 (Mark Suster, Upfront Ventures)
Mark dives into one of his most in depth blog posts of the year, discussing the state of venture capital and where he believes the industry is heading.
Albert discusses the importance of choosing between profitability and growth through raising venture capital.
How Specialized VCs Will Outperform the Market (Jim Scheinman, Maven Ventures)
Jim publishes his theory on why he belieces specialized VCs will outperform the market in the next several years.
Based on the past 4 weeks of U.S. funding announcements, which totaled $5.6 Billion, if Q4 funding activity were to continue at the current pace the total capital deployed would be $17.5 Billion. This a 20% decline from Q3 and just above Q4 2014, which saw $16B deployed.
Phil Haslett | Founder & Head of Investor Relations | EquityZen 
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