Square acqui-hires predictive analytics company Framed Data

Framed Data will be shut down, and the team will come to work at Square Capital

Square launched Square Capital in 2014, as a way to provide simple access to funds for businesses to grow. Of course, there's more to it than just giving businesses funding; the company has to determine if the business is eligible, to help manage the risk, and to give them the best tools to help them pay back that loan.

What it comes down to is analytics, to to help businesses predict customer engagement and prescribe marketing actions. So Square announced on Monday that it has acquired Framed Data, a company that takes data from businesses and turns it into actionable insights and decisions.

While no financial information was disclosed, a spokesperson for Square did tell me that this is was an acqui-hire, meaning that the company acquired the team, but will not be incorporating any of its technology.

In all, five people from Framed's team will join Square this month, and, in a blog post, Jackie Reses, Square Capital lead, revealed that those employees will be joining her team, where they will be "building models that allow us to further extend financing to businesses, including those that would otherwise find it difficult or impossible through traditional banking."

"This approach helps accelerate growth for underserved businesses and empowers them to increase participation in their local economies," she said.

Founded in 2013, Framed Data built a product rooted in machine learning to help businesses predict customer engagement and prescribe marketing actions. The company trained, optimized and stored productionized models in their cloud and provided predictions through an API, eliminating infrastructure overhead. It also provided dashboards and scenario analysis tools that tell its user which company levers are driving metrics they cared about.

Through the Square Capital program, businesses automatically pay Square as a set percentage of daily card sales, between 4% and 10%. What that means that they pay more when sales go up, and they pay less when their sales are down. The percentage taken out of sales is in addition to Square’s normal processing fees.

So, to give an example, if a business requests $10,000, Square would deposit that amount in their bank account. The business would owe Square capital $11,000 and would pay 10% of its daily card sales.

Businesses are expected to pay off the advance within 10 months, though the company says that, "the total cost to the seller never changes, regardless of how long it takes to pay Square."

"Like Square, the Framed Data team believes that using data insights and machine learning to help customers improve their businesses creates immense value and empowers business owners to make better decisions," said Reses. 

This is Square's first acquisition since it acquired food delivery company Fastbite in April of last year, which is then integrated into Caviar.

More notably, this it's first as a public company. Square went public in November, and was subquently named the worst IPO of the year. Its valuation dropped 30 percent in IPO pricing, as it had been valued at $6 billion, after which it dropped to $4.7 billion.

The company ended trading on Monday at $11.61 a share, down 11.31 percent year-to-date, but up 25.7 percent from its $9 IPO price.

(Image source: framed.io)