Square's new $200M makes Dorsey a billionaire, report says

Investors value Square at $3.25 billion, but it needs to fight off its growing number of competitors, a research firm says.

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Donna Tam covers Amazon and other fun stuff for CNET News. She is a San Francisco native who enjoys feasting, merrymaking, checking her Gmail and reading her Kindle.
Donna Tam
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Twitter and Square founder Jack Dorsey. James Martin/CNET

Square has once again raised a ton of money, closing a $200 million round of funding that will make CEO Jack Dorsey a certified paper billionaire, according to those watching the industry.

Although neither the company nor its lead investor -- little-known private equity firm Rizvi Traverse of Michigan -- would confirm the matter, news of the dollar figure has been swirling around today.

Rizvi Traverse other investments include Playboy, Facebook and Twitter, according to the company's Web site.

The funding, which is twice the amount the company raised last year, puts a valuation of $3.25 billion, an unheard of amount for a 3-year-old, privately-held company, according to PrivCo, a research firm that specializes in private companies' financial data.


According to the firm, Square's 2012 revenue will be at least a 300 percent increase from Square's reported revenue of $42.5 million last year. The new funding puts Dorsey, who's also a founder and executive chairman of Twitter, in the billionaire's circle, PrivCo said.

Launched in 2010, Square's card reader plugs into the headphone jack of mobile devices, allowing merchants to process credit cards from any location. The company charges 2.75 percent per swipe and boasts more than 1 billion customers. The company has also launched merchant services like Square Registry and the Pay with Square app.

The new funding is a testament to Square's increasing popularity, but PrivCo CEO Sam Hamadeh said the company has some challenges to overcome as more competitors -- like PayPal -- emerge.

"PrivCo has always felt that Square was a company being 'built to be bought,' and we still feel that is true, as the company would make a perfect acquisition for a major payment processor that is behind the curve on mobile payments," Hamadeh said in a statement Wednesday. "We don't see Square being an independent company forever."

Previous news reports indicated that Square was looking for an even higher valuation -- $4 billion.

Although the company found investors willing to pay the hefty price tag, Square decided to go with another group of investors that weren't keen to the $4 billion valuation, The New York Times reported.