GIC leads US$150m investment in mobile payments startup Square
Singapore
CONTINUING its investing spree for global technology companies, Singapore's sovereign wealth fund GIC is believed to have led a US$150 million venture-capital round in Square, a San Francisco-based mobile payments startup founded by Twitter co-founder Jack Dorsey.
The Series E round, confirmed by Square on Sunday, values the company at US$6 billion, and takes total funding received to-date to over US$590 million since 2009.
Early on Friday, GIC confirmed its investment to The Business Times, but declined to reveal the amount and how it compares to that of other investors - who, according to sources, include Goldman Sachs and New York private equity firm Rizvi Traverse Management; both have made previous investments in Square.
On what attracted it to the five-year-old startup, GIC said: "Square is building a Register that includes a full suite of services businesses need to provide the best customer experience and take care of core business operations."
Since 2009, Square has created a string of mobile payment solutions for merchants, among them Register (a point-of-sale app), Market (a free e-commerce platform for online stores), Reader (a credit card reader) and Stand (a point-of-sale stand).
But in recent years, Square has been seen struggling to turn a profit and was said to have recorded a loss of about US$100 million in 2013.
Amid fresh competition from Apple Pay and Amazon's new credit card reader Local Register, as well as rival PayPal's split from eBay, Square had even expanded beyond payments to food delivery, and held talks about a possible sale to tech giants Apple and Google, said sources.
At US$6 billion, investors are valuing Square at slightly more than earlier this year; digital consulting firm Digi-Capital gave it a US$5 billion price tag in the World Startup Report in September.
But to observers, the unlikely source of the new capital, GIC, suggests that Square struggled to attract top tech investors at the higher price.
"Some of the marquee investors are beginning to become a bit hesitant as it relates to Square's future," said Jordan McKee, a senior analyst at Boston-based 451 Research, to The Wall Street Journal on Monday.
GIC's response, when asked about these opportunities and challenges faced by Square, suggested they were aware of them.
"As a long-term value investor, GIC believes the rising secular trend and penetration of mobile payment software will present good investment opportunities. Square, in particular, plays a key role in accelerating the acceptance of all forms of payments in the small and medium businesses sector," said GIC.
Earlier this year, the fund management company made investments in several tech startups, including Flipkart, India's largest e-commerce company; iParadigms, a US-based anti-plagiarism solutions provider; and Netshoes, a Brazilian online sports retailer.
