Foursquare's Valuation Is Getting Chopped in Half

Foursquare is close to finalizing a "down" round of funding that will value the company at less than half of what investors thought it was worth just two years ago.


Down rounds are typically punishing for founders, reducing both the value and the size of their stakes in concert. Frequently, doing one triggers "anti-dilution" mechanisms designed to protect early investors by carving up founders' equity still more. A down round is thus widely regarded as a red flag for a company.

I had to look up what Foursquare even was. Now, I know what it is, I don't plan on every using it.

A lot of these "web 2.0" companies have laughable valuations that aren't based on revenue at all. Foursquare is definitely worth more than some of the totally unprofitable ones, like Twitter, but it's not worth 250 million.

I've used it in the past, but since Google integrated restaurant ratings I haven't bothered. Google, Foursquare and Yelp are pretty indistinguishable for rating restaurants.

Have any of these profitless, highly valued companies ever actually made money for their investors? Surely the people giving them cash aren't stupid, but I rarely hear of them getting bought out.

I didn't even think they were still around. I remember they were somewhat popular a couple years ago, but they faded to nothing. Yelp kind of took the forefront.

Wrecked Em said:

Have any of these profitless, highly valued companies ever actually made money for their investors? Surely the people giving them cash aren't stupid, but I rarely hear of them getting bought out.

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It's all about funny money, the early investors get out.. Banks (who print money anyway) 401ks 403bs and retirement plans get on the hook. High finance is funny legally corrupt business.!