For a business that started just over 12 months ago to be valued at £63.65 million today is a phenomenal achievement. What’s more bizarre is the fact that the business as it stands does not actually have a substantial income stream as such.
Foursquare, the location-based social media network has raised £13.4 million ($20 million) from investors. The company made the announcement on its blog and the news has stunned a number of pundits who thought the company would sell-out to one of the existing “big boys” such as Yahoo, Google or even Microsoft.
But Foursquare’s bosses have decided to go it alone – with the help of some kind individual investors. Instead, they see their future in their own hands. And why not? They’ve managed to develop a social media network that has nearly two million users and is growing significantly day-to-day in just over a year. What other small start-up has achieved such growth in recent years – other than Twitter. So why not develop your own tools to take the business forward than jump for the cash in the bank and retire early option?
Co-founder Dennis Crowley (@dens), said: “Today we closed on a $20m Series B round with Union Square Ventures, O’Reilly AlphaTech Ventures and our newest partner, Andreessen Horowitz. We’re thrilled to have the continued support of our original investors and additional support and expertise from the team at Andreessen Horowitz. The two big names behind Andreessen Horowitz – Marc Andreessen and Ben Horowitz – are each legends in Silicon Valley. They know better than anyone how to transform startups into successful organizations. As we continue to rapidly expand to take advantage of the opportunities in front of us, Ben and Marc’s expertise in growing companies will be invaluable.”
And with the investment they plan to:
“With this new round of financing, our main priority will be to expand our organization to supplement the amazing core team we’ve assembled already. We’re hoping to build a world-class engineering organization, based primarily in our headquarters in New York City, to help us develop the next generation of mobile + social + local products that will excite our users and provide unique value for local merchants. The new investment capital will also help fund the infrastructure needed to house our team (we’re finally getting a new office!) and support our growing audience of nearly 2m users. It’s been a crazy year for us and we’re expecting the next 12 months to be even more of an adventure. Look forward to more great product from us soon… we’re really just getting started.”
It’ll be interesting to see what Foursquare is planning and how it can win over the legions of people already using other social networks and who currently use Foursquare as an add-on to these. Foursquare will need to become a much more dominant front-of-house network rather than the backstage support which, if we’re honest, it is as people use it to mark their location via other networks. So could this be where the battle between the big social media giants starts to shift? Or will we see more co-development between the “smaller” players? Only time will tell.
Nevertheless, from a marketing perspective it’s going to be an interesting time. With the likes of Gowalla and Brightkite, decisions will need to be taken by some on who and how they develop their marketing strategies on what location-based platforms. Choose the wrong one and your clients/company could be left behind. At the moment, my money’s on Foursquare.