IPO as down round

Square has gone public, seeking a target valuation of about $4B, down materially from it's $6B round in 2014. What this means depends entirely on the clause in it's cap table.

It's quite likely that later investors, who put money in at $6B, have provisions that protect their investment. They will likely be getting all of their money out, and maybe even making a profit.

Earlier investors may be sitting on more gains, and likely have liquidation preferences as well, so they too will, most likely, get all of their money out and make a nice return.

However, $2B of value has vanished, and this needs to come from somewhere. Most likely, it will come from the equity stakes of employees, and maybe the founders as well unless they negotiated some insurance for themselves.

If their stakes have been wiped our, maybe management will issue them new shares at the $4B public valuation? I'm not sure I've ever seen a down round in such a public arena before.