Square’s Closely Watched IPO Puts Unicorn Companies in Spotlight

Square’s forthcoming IPO could have significant implications for the IPO market and for so-called unicorn companies that flaunt valuations north of $1 billion, according to one IPO expert. ‘All eyes are going to be on Square from anyone that has a venture capital investment that’s a billion dollars or greater,’ said Kathleen Smith, principal of Greenwich, Conn.-based Renaissance Capital, which manages IPO focused exchange traded funds. ‘The IPO market has not seen many [unicorn companies], and they’ve been stuck in private rounds, mainly because the IPO market is pretty price sensitive and I think there’s some worry that the ones who do come out are going to be discounted like Square.’ Square is expected to price between $11 and $13 a share, valuing the mobile payments giant at $4.2 billion, which Smith says is 30 percent below the last round of private financing, ‘so Square has already taken a pretty good haircut.’ TheStreet’s Scott Gamm speaks with Smith in New York.