Foursquare Raises $41 Million In Debt
Four Square CEO Dennis Crowley—Image via Flickr/ Vadim Lavrusik
I don’t know how anyone else feels about mobile companies, but I’m getting really sick of tech companies trying as hard as they can to be the next Facebook. It seems as though they don’t realize that the very foundation of Facebook is innovation and the ability to make people want a product.
And even though there are companies like Four Square that are good products, Facebook and Twitter are nearing a mobile monopoly towards how people spend time on their phones. This is making it very hard for other companies to not only gain members but also to evaluate how much their company is worth; which just happen to be the two main problems Four Square is encountering. To answer this problem, the mobile start up company has raised $41 million dollars in debt that they can then use to invest back into the company and make an overall better product. Since last winter, Four Square has had problems encouraging investors to believe that they are worth the $760 million dollars that they were originally valued at in early 2012. Luckily for the company, raising debt instead of equity has helped them avoid the obstacle of placing an actual value on the company. This also allows the company to turn the debt into equity and hopefully make the company more stable and steady.
As far as the actual service goes, I just don’t get it. Essentially, by using the app, you can check-in when you go to restaurants and get decent coupons for a small fee. But how is it different than checking in on Facebook? Essentially anything that the company can offer can also be offered by a similar service that is more commonplace in the mobile world. In all honesty, the fact that Facebook hasn’t bought Four Square makes me feel as though they’re not even enough of a threat to be on the top mobile app’s radar.
To be fair, Four Square is working hard to create a more personal application designed to help people find the type of restaurant they really want to go to. It’s a great way to avoid wasting money at a restaurant you didn’t know you didn’t like. It’s cool and it’s trendy; two very important aspects of the mobile industry. And Four Square’s coupon service can really give you some home run coupons if you get lucky enough (I rarely do). Obviously my opinion isn’t that of everyone’s, and the 33 million regular users of the app are a testament to that. That being said, from an investment standpoint, I just don’t see any potential in Four Square as a standalone company. They lack the user base and overall traffic to generate a successful amount of revenue. And if your little heart is just set on Four Square being a success, digest this information for a little bit.
Four Square has eight million new users since November 2012. In the same time frame Facebook has received 40 million new users and even they are struggling to sustain success on the stock market. No one said going public was easy, and Four Square will need a lot more than 41 million to even get close to getting sustainable investors.
