According to Dealogic, there have been 19 tech offerings in 2015 so far, almost a 54% plunge from the same time last year. Tech IPO enthusiasts have not been too happy as more tech startups opted for private funding this year.

However, investors now have a reason to smile as Square Inc. finally filed for an IPO, albeit confidentially, per the Wall Street Journal (WSJ).

More about Square

Jim McKelvey, in 2008, was unable to complete a $1,000 sale of his glass faucets and fittings as he could not accept credit cards. This inspired him and his friend, Jack Dorsey, to start a company — Square — that manufactures tiny credit-card readers that can be attached to a smartphone or tablet.

The WSJ reports that Square filed its prospectus under the Jumpstart Our Business Startups Act, which allows companies with annual revenues of less than $1 billion to file their IPO paperwork confidentially.

The San Francisco-based company, named after the square card readers that it manufactures and sells, charges 2.75% of each transaction.

However, due to the low-margin nature of the credit-card swiping business, Square has come up with innovative ways of generating revenues from its relation with more than 10 million merchants.

The company launched a small-business lending program — Square Capital — and sold iPad-based registers known as Square Stand for $99.

Flatterers

Square has gone on to become an extremely popular payment system for coffee shops and taxi drivers among others.

Imitation, they say, is the best form of flattery, and Square is getting flattered! Take for instance, PayPal’s PYPL “Here card-swiping device”.  Amazon.com Inc. AMZN is also planning to launch a similar device.

Most Wanted: Mr. Dorsey!

With this secret IPO filing, CEO Dorsey, and especially his career, has received a lot of attention.

Dorsey, also a co-founder of Twitter TWTR, took office as the interim CEO at Twitter last month, after Dick Costolo stepped down.

Reportedly, his name has been floated for the position of permanent CEO at Twitter, a role that would most likely require him to hand in his papers at Square. Just last year, Dorsey said that he had no plans of leaving Square.

According to documents filed by Square in February with the Department of Commerce in Alaska, Dorsey is Square’s biggest shareholder with a 26.2% ownership stake.

The IPO World

Square’s IPO could actually test the market’s appetite for tech offerings, as an increasing number of companies are opting for large rounds of private capital.

An IPO would also assess if public-market investors are ready to value the company as highly as its venture-capital backers. Over the course of seven rounds of financing, venture capitalists have bid up Square’s valuation. In fact, last year, the company was valued at $6 billion by investors.

According to the WSJ, the recent spin-off of PayPal from eBay Inc. EBAY could “set a bar for investors trying to assign a public-market value for Square.” PayPal has been valued at about $45 billion in the public market.

Conclusion

This offering is definitely a breather for tech IPO investors. Only time will tell if the company impresses or not. For now, Square has declined to comment on matters regarding the filing.

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