Twitter's owner a billionaire now

Twitter and Square founder Jack Dorsey.

(Credit: 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 billionaire, according to those watching the industry.
Although neither the company nor its lead investor -- little-known private equity firm Rizvi Traverse of Michigan -- has confirmed or commented on 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 also founded Twitter and has a stake in the social media company, 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.

FACEBOOK FALLOUT: After The IPO, Late Stage Investors Are Getting Tighter

Yesterday, Square finally closed its latest round of funding. The valuation, $3.25 billion, was huge, but not the $4 billion+ Square was reportedly looking for.
Meanwhile, we've heard that Spotify is likewise finding it difficult to raise yet another round of funding at a multibillion dollar valuation.
New York ad tech firm AppNexus, talked about as though it is a very successful company worth billions to a buyer, also spent the past few months looking at term sheets with valuations lower than its management had expected to see.
What's going on?
Fallout from the Facebook IPO, is what. It didn't go as planned for lots of late stage investors who bought into the company at a very high valuation during its last few years as a private enterprise.
General Atlantic, for one, bought in at $65 billion valuation in March 2011. That's right around Facebook's market cap now.
One person close to these kinds of late stage startup investments says that late stage investors are actively bringing up the Facebook IPO in negotiations with other late stage startups in an effort to drive down valuations.

"Potential investors are trying to use it to depress value – why not?"

Another source, this one a prominent Silicon Valley VC, says the Facebook IPO was "a reality check" on the "trivialization of the billion dollar valuation."

"The world is waking up that 'the sky is the limit" doesn't work."

Our first source – one who helps startups fund raise – says that some late stage startups are holding off on fundraising till the Facebook deal moves from the forefront a bit.

He believes it will in the medium term.

"Water will find its level. No company is powerful enough to affect the entire market."

Facebook itself has a chance to expedite this leveling when it reports Q2 earnings tomorrow.