Square Partners With Starbucks Raises $25M For Series D; Howard Schultz Joins The Board
It might not be the funding announcement we've been hearing rumors about but today Square announced that they've partnered with Starbucks. But there's more! — Square will soon begin processing …
Context & Ripple Effects
This closes the loop on a financing Square has been telegraphing all summer: after its $27.5 million raise in January 2011, DealBook reported just two weeks ago that Square expected new financing at a loftier valuation. Today's announcement is that round — $25 million of Series D coming from Starbucks itself, per The Next Web valuing the company at $3.25 billion.
The unusual part is the structure: Starbucks is simultaneously investor, board seat holder (Howard Schultz), and customer, with Square set to process payments in its stores. The story traveled unusually widely for a funding note — WSJ, CNET, AllThingsD, Engadget, The Verge and SplatF all picked it up the same day.
First-order effects
- Starbucks becomes Square's highest-profile merchant overnight, putting Square's payment processing inside a national retail chain rather than the small-merchant base it built its business on.
- Howard Schultz joins the board, giving Square a director whose day job is running thousands of retail locations — direct operational access as it scales upmarket.
Second-order effects
- Every rival in mobile card acceptance now pitches against a competitor carrying a marquee retailer as both backer and reference customer, raising the bar for comparable distribution partnerships elsewhere in payments.
- Other national chains weighing mobile wallet adoption face a choice between striking their own Square-style deal or ceding the early-mover branding to Starbucks.
Third-order effects
- The round models a shift in late-stage consumer-tech financing: strategic corporate investors taking equity plus board seats so that the investor's own storefronts double as the startup's distribution — alignment that pure financial investors cannot offer.
- If the pattern holds, payments consolidation runs through retail relationships rather than technology alone, with the largest merchants becoming kingmakers for whichever processor they endorse.
The trend: Mobile payments startups are trading equity for retail distribution, with strategic corporate investors like Starbucks serving as customer, board member, and financier at once.