I think Square can't raise money in the private market at a price they're willing to take
Danielle Morrill, founder of Mattermark, a startup that tracks data on startups, has a theory.
She thinks Square couldn't raise money on the private markets at a price it was happy with, so it's trying the public markets.
Morrill was the guest on a podcast I do with Farhad Manjoo, a technology columnist at The New York Times. We spoke about the state of the startup industry. For the past 5 years, valuations have been flying higher and higher, leading some people to say we're in a tech bubble.
We kicked around whether it's a bubble (probably not, but prices are higher than ever) and what it means for the startup world (there's a lot of people with stock that might not be worth what they think it is worth).
The opportunity to become a unicorn, or a billion-dollar startup, is quickly coming to a close says Morrill.
She says that the hurdle to raise big funding is getting higher as investors get more worried about "yield." Basically, investors are getting a bit choosier, perhaps as a trickle down impact of public markets not going crazy for a lot of tech companies that go public. (See: Box, Pure Storage.)
So, if you're looking to get some funding at a $1 billion valuation, hurry up before it's too late!
This squeeze is part of the reason she thinks Square is going to the public markets.
Listen below.
You can subscribe to the podcast in iTunes here. Or just look for it in your favorite podcast app under "Jay and Farhad". Here's an RSS link to the show. We use SoundCloud as a host, so you can listen to the show over there, too.