“The San Francisco company said Mr. Khosla was planning to relinquish his board seat because he prefers not to hold that role on publicly traded companies. He will step down when Square files its registration statement and remain an adviser to the company.” , The Wall Street Journal

“Khosla’s a very smart guy. He wants nothing to do with public company boards, where there is all kinds of legal liability: private class action securities lawsuits, arbitrary enforcement of the securities laws by the SEC and a lot of non-value-added compliance and other B.S. The truth is that Square (and companies like it), even after going public, could just as likely fail, as succeed, yet you will never see that said plainly in the S-1 filing or roadshow presentation. (Why is that SEC, given you approve these documents and allow them to go public?) And I am sure Mr. Khosla hopes to be long gone, with money in the bank from the IPO, by the time Square either succeeds or fails.”, Mike Perry

October 26, 2015, Greg Bensinger, The Wall Street Journal

Business

Square Inc. Reports Another Loss as IPO Roadshow Approaches

Payments startup says it raised another $30 million in funding, and stakeholder Vinod Khosla is leaving board

Vinod Khosla of Khosla Ventures is leaving the board of Square. He has a 17% stake in the payments company.

Vinod Khosla of Khosla Ventures is leaving the board of Square. He has a 17% stake in the payments company. PHOTO: STEVE JENNINGS/GETTY IMAGES FOR TECHCRUNCH

By Greg Bensinger

Payments startup Square Inc. on Monday disclosed that its quarterly losses are mounting and sales growth is slowing, a troubling sign as the company approaches an initial public offering.

The company also revealed in an amended IPO filing that it raised another $30 million in funding and that one of its earliest investors, Vinod Khosla of Khosla Ventures, is leaving the board. Mr. Khosla’s firm is the second-largest shareholder in Square with a 17.3% stake. Only founder and Chief Executive Jack Dorsey, who is also the CEO of Twitter Inc., holds a larger stake with 24.4%.

The San Francisco company said Mr. Khosla was planning to relinquish his board seat because he prefers not to hold that role on publicly traded companies. He will step down when Square files its registration statement and remain an adviser to the company.

Mr. Khosla didn’t immediately return a request for comment. A Square spokeswoman declined to comment.

On Twitter, Mr. Khosla wrote: “It has been a privilege to serve on Square’s board with [Mr. Dorsey.] I look forward to remaining an advisor to him and his exceptional team.”

Square’s offering is seen as a harbinger for tech companies valued at $1 billion or more. It was valued by investors last fall at about $6 billion.

Square Inc.'s slowing growth and steep losses will likely be scrutinized as founder Jack Dorsey heads out on an IPO roadshow.

Square Inc.’s slowing growth and steep losses will likely be scrutinized as founder Jack Dorsey heads out on an IPO roadshow.

PHOTO: EUROPEAN PRESSPHOTO AGENCY

Its slowing growth and steep losses will likely be scrutinized as Mr. Dorsey heads out on an IPO roadshow. The company updated potential investors on its finances, disclosing that it lost $53.9 million in this year’s third quarter, the largest total since at least the fourth quarter of 2013, the furthest back the six-year-old company has released quarterly figures. Square this year has lost $131.5 million on $892.2 million in sales, according to the filings.

Square’s sales rose 46% to $332.2 million in the quarter, a lower growth rate than the 50% in the second quarter and 52% in the first quarter.

Square did manage to extract itself from its money-losing deal with Starbucks Corp. The coffee retailer said earlier this month it will rely on J.P. Morgan Chase & Co. to process payments at the register.

That deal had brought in $342.2 million in revenue for Square since 2012, but cost it $421.8 million. Even without the Starbucks deal, Square’s quarterly sales growth would still have weakened and its losses widened.

As for the extra funding, Square said it raised $30 million from two investors at the same Series E price from one year ago, when the company raised $150 million at a $6 billion valuation.

However, Square said, the newest funding didn’t come with the “ratchet” that investors previously received, entitling them to receive additional common shares in the offering if the IPO price isn’t 20% higher than what they paid.

Posted on October 27, 2015, in Postings. Bookmark the permalink. Leave a comment.

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