Foursquare is poised to get a big round from VC firm Andreessen-Horowitz, after engaging in “serious” acquisition talks with Yahoo and even more serious discussions with Facebook. The latter revelation is according to AllThingsD.
That same “D” article suggests that Facebook had been within “one inch” of an acquisition and that Foursquare co-founder Dennis Crowley had wanted it that way. So something happened or didn’t happen, as the case may be. Now Foursquare will continue to go it alone — for awhile at least.
Previously Foursquare raised $1.35 million, led by Union Square Ventures.
The company will come up again for an acquisition sooner or later, depending on its continued momentum and how large the valuation is. Earlier this year Foursquare reported 1.7 million uniques. The number is now closer to (or maybe beyond) two million.
With rivals liberally borrowing Foursquare features and Facebook preparing to offer some sort of location capability the way forward is a bit more competitive.
To succeed Foursquare will need to become more “mainstream.” Though, paradoxically, the widespread copying and adoption of checking-in and of some of Foursquare’s other gaming features (i.e., badges, levels) may have that impact. Yelp, for example, is a much larger site and it’s helping to socialize some of those features among its user base.
Then there’s the business model. There are some licensing deals with big brands. But there are no paid products so far for small “advertisers.” However, if Foursquare were to introduce ads or coupons it might face some resistance:
Beyond that penetrating the SMB advertiser base is very challenging for entities without a sales force. So, as impressive as Foursquare’s growth and adoption have been, it’s still searching for a viable business model. Of course that won’t matter if it gets bought later.