How Square Is Now Valued at $3.25 Billion
So much for new-age virtual technology companies being at risk of more scrutiny for investors. AllThingsD and the FT have both reported that a pending fourth round of venture capital has been taken on by mobile payments company Square. The…
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So much for new-age virtual technology companies being at risk of more scrutiny for investors. AllThingsD and the FT have both reported that a pending fourth round of venture capital has been taken on by mobile payments company Square. The $200 million investment was said to be at a $3.25 billion valuation.
Square is now said to handle some $8 billion in payments each year and Second Market’s web site shows that Kleiner Perkins Caufield & Byers, Visa Inc. (NYSE: V), Sequoia Ventures, Khosla Ventures and others have all put money into Square.
As far as how you would value square, you just have to come up with a rough annual payments projection and factor in that Square’s smartphone card-swipe attachment is free but it takes 2.75% of a transaction. If you straight-line the math of 2.75% on $8 billion without considering growth and without considering any competition down the road, then that would come to $220 million in annualized sales and that would put this latest valuation at close to 15-times sales.
JON C. OGG
Contact [email protected] for any questions or corrections.
Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.
