Here's Why Square Couldn't Swipe A $4 Billion Valuation

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Photo: Ellis Hamburger, Business Insider

Square is about to raise $200 million in a round led by Rizvi Traverse Management, the New York Times is reporting.The deal would give the San Francisco-based online-payments startup a valuation of $3.25 billion—double what it was worth a year ago, but short of the $4 billion to $5 billion valuation it was reportedly seeking.

In the spring, we noted that Square CEO Jack Dorsey and COO Keith Rabois were taking trips to Boston and Baltimore, the homes of big money managers like Fidelity and T. Rowe Price.

But those firms seem to have lost their appetite for late-stage investments in private tech companies, having been burned by the post-IPO performance of Groupon, Zynga, and Facebook. Typically, they recycle profits from those deals into new investments. Since in many cases those companies are trading below where the private-equity investors bought their shares, there’s simply less money available in that asset class for companies like Square.

But Rizvi Traverse, run by Suhail Rizvi, is in a different category. For one thing, it’s a known quantity to Square management as an investor in Dorsey’s other company, Twitter. And it is flush, having recently sold talent agency ICM and Summit Entertainment.

Square isn’t commenting on its fundraising. But it is definitely showing signs of bullishness. In June, it reported that it was now processing payments at an annualized rate of $6 billion a year. It also hired a new CFO from

And Dorsey recently tweeted about the group of 33 new hires he took on an orientation last week—the largest group ever, he noted. Square now has more than 350 employees.

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