We’ve seen over last months how messy were IPOs of major social media players like Facebook, Zynga or Groupon. Facebook value went 40% down, Zynga and Groupon more than 70%. Bad moods of investors are now affecting Foursquare which is having troubles convincing them that its valuation shouldn’t shrink.
A few months before Facebook went public in May, venture capital firm Spark Capital Partners LLC bought $30 million of Foursquare Labs Inc. stock from the startup’s employees in a deal that valued the four-year-old company at $760 million. Now, Foursquare is having a hard time convincing investors that it is worth that much money as it looks to raise around $50 million. But no one is interested…
The Facebook’s discouraging IPO is not the only reason of 4SQ problems. Actually Foursquare user growth is quickly slowing down. There are 24 mln users registered but only 8 mln uses the service on a regular basis. Moreover the company is basically not making money. In 2012 Foursquare generated only $2 mln revenues. Wow. It’s like nothing. To compare Facebook earned $1oo mln and Twitter $45mln.
Foursquare is clearly making moves to finally start generating revenues by trying compete with Yelp as local search and exploration platform. It seems that monetization is the biggest task for 4SQ in 2013.
Watch interesting comments from Wall Street Journal (press play button):
source: Wall Street Journal