Cash Strapped Mobile Payments Startup Eyes Sale

With losses widening and cash shrinking, representatives of mobile-payments startup Square Inc. have discussed a possible sale to several deeper-pocketed rivals, according to people familiar with the matter.

Google Inc. discussed a possible acquisition of Square earlier this year, according to three people familiar with the matter. Those talks followed a meeting in 2012 between top Google and Square executives to discuss a possible takeover, according to two people familiar with the matter. It isn’t clear whether the talks are continuing.

Square also had informal discussions about a deal with Apple Inc.  and eBay Inc.’s PayPal in the past, according to people familiar with those situations. Those conversations never developed into serious talks.

Square recorded a loss of roughly $100 million in 2013, broader than its loss in 2012, according to two people familiar with the matter.

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The five-year-old company paid out roughly $110 million more in cash last year than it took in, according to two people familiar with the matter. Over the past three years, the startup has consumed more than half of the roughly $340 million it has raised from at least four rounds of equity financing since 2009, two people familiar with the company’s performance said.

A spokesman for Square said, “We are not, nor have we ever been in acquisition talks with Google.”

He added, “While we appreciate that Square may be an attractive target for some companies, we have never seriously considered selling to anyone or been in any talks to do so.”

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A spokesman for Paypal said, “We did not have acquisition talks with Square.”

Square would likely fetch billions of dollars in a sale.

Co-founder and Chief Executive Jack Dorsey is a well-known Silicon Valley entrepreneur with a flair for design. Dorsey also was a co-founder of Twitter Inc. , which conducted an initial public offering of stock in November.

Over the years, the rising profiles of its brand and of Dorsey have helped Square raise money at larger valuations. Square insiders sold shares earlier this year on the secondary market at a price that valued the company at roughly $5.2 billion, according to people familiar with the offering.

An expanded version of this report appears at