Square files to go public

Square filed an initial public offering today.
The payments company, which was co-founded by Jack Dorsey and Jim McKelvey in 2009, has been rumored to be planing a public offering for some time. Now it has filed its S-1 with the US Securities and Exchange Commission.
Square will be listed on the New York Stock Exchange with the “SQ” symbol. The NYSE became popular among tech companies looking to go public in 2013, after Nasdaq was widely perceived to have bungled Facebook’s public offering.
Dorsey serves as the company’s chief executive, and was also recently named the full-time CEO at Twitter, the other company he co-founded. Interestingly, Square mentions in the S-1 filling that Dorsey’s split attention between the two companies could be a risk factor.
Dorsey for his part does, however, explain his commitment to Square in a letter included in the filing:

I believe so much in the potential of this company to drive positive impact in my lifetime that over the past two years I have given over 15 million shares, or 20% of my own equity, back to both Square and the Start Small Foundation, a new organization I created to meaningfully invest in the folks who inspire us: artists, musicians, and local businesses, with a special focus on underserved communities around the world. The shares being made available for the directed share program in this offering are being sold by the Start Small Foundation, giving Square customers the ability to buy equity to support the Foundation. I have also committed to give 40 million more of my shares, an additional 10% of the company, to invest in this cause. I’d rather have a smaller part of something big than a bigger part of something small.

Fusion notes that even as Square’s revenues grew by $298 million between 2013 and 2014, its losses also grew by $50 million in the same period. (It drew $561 million in revenues in the first half of 2015 and lost $78 million in that time.)
Previous reports indicate that Square plans to complete its initial public offering by the end of the year. The company has not yet revealed its initial price range, nor how many of its shares it plans to sell in the offering.

Apple finally joins the Dow, AT&T out

Apple, the world’s most valuable company, will be calculated in the Dow Jones Industrial Average index starting later this month, the Wall Street Journal reported on Friday. The move has been a long time coming, and was likely made possible by last year’s 7-for-1 stock split which significantly reduced the per-share price of Apple, making it easier to fold into the price-weighted blue chip index. [company]Apple[/company] will replace [company]AT&T[/company] in the prestigious group of thirty major American companies. Apple is currently traded on the Nasdaq and shares were trading at $125.41 at the time of publication.

Etsy files for an IPO, looks to raise up to $100M

Ten-year-old artisanal e-commerce site Etsy just filed to go public, hoping to raise up to $100 million. Etsy chose the NASDAQ over the NYSE and landed its own name as its stock ticker — ETSY.

According to the filing, the company generated revenue of $195.6 million in 2014, which was 56 percent growth over its revenue in 2013 of $125.02 million. The company isn’t quite breaking even, though it’s come close in the past. Etsy lost $15.2 million in 2014, which was a larger loss than its net loss in 2013 of $0.8 million, and $2.36 million in 2012.

Etsy’s growth has been substantial over the years. In terms of the total amount of sales made through the site, Etsy hit $1.93 billion in 2014 (up 43.3 percent from 2013), and the company claims 54 million members, of which 1.4 million are active sellers and 19.8 million are active buyers.

But Etsy isn’t profitable because it spent significantly more money in 2014 as it ramped up marketing, product development and general administrative spending. In 2014 its total operating expenses were $128.21 million, compared to operating expenses of $76.51 million in 2013, and $51.47 million in 2012. As of December 31, 2014, Etsy had an accumulated deficit of $32.4 million.

Etsy is focused on growth this year and part of its growth strategy is expanding into international markets, says the company in its filing. Another part of its growth strategy is to bring in more buyers to the platform, which it intends to do partly through more marketing. Etsy says much of its current marketing has been through “word-of-mouth referrals and other organic means.”

Etsy had 251 employees at the end of 2011, and 685 employees at the end of 2014. That’s 172.9 percent growth in staff over three years.

Etsy says in the filing that it has enough cash, cash generated from operations, and borrowing capacity to meet its anticipated cash needs for at least the next 12 months. But the company says it may need “additional cash resources” after that. Goldman Sachs, Morgan Stanley and Allen & Company are the bankers in the IPO deal.

If Etsy goes public it will provide a return for its investors. Accel Partners owns 27 percent of shares before the offering and famed venture capitalist Jim Breyer led that investment. Index Ventures owns 12.8 percent before the offering; Union Square Ventures owns 15.2 percent, and well known Fred Wilson led that investment. Etsy CEO Chad Dickerson owns 2.1 percent of the shares.

Etsy has raised close to $100 million in funding. Bloomberg speculates that the company could be valued at $2 billion.

This story is developing and I’ll update as more information comes to light…

Nasdaq on the virtues of the public cloud

Financial institutions have a lot of data — as in multiple petabytes– so storing that data for use in new products and for regulatory compliance will move to the public cloud.

With new service, Nasdaq brings Wall Street data to Amazon’s cloud

Nasdaq OMX is offering a new service called FinQloud for financial services clients that want to store regulatory data or analyze trade data using on-demand resources. Built atop Amazon Web Services, the service seems to be the result of a close partnership between the two companies.

What can anybody do to make London better for tech IPOs?

European technology companies looking to go public usually desert their home turf and head to the U.S. — creating an echo chamber that has made some local investors angry. Now reports suggest that the British government may be trying to reverse that trend. Can it work?

Are Europe’s startups and investors defeatist?

Neil Rimer of Index Ventures thinks one of the big problems for European startups — the lack of local exit opportunities — is all of its own making. But who has the guts to take up his challenge and go public in London?