Foursquare is venture capital backed, so an IPO or an acquisition would be the standard ways to repay their investors, but an IPO seems unlikely. Foursquare has struggled to make a profit in its existing business model, and only generated an estimated $2 million in revenue last year. Without a game plan, the profit problem could be unattractive to public investors.
The company has raised capital based off a $760 million valuation, so private investors must be optimistic about the company, and if it could sell itself. A number of acquirers could use Foursquare to create synergies. With over 30 million users and 3 billion check-ins, Foursquare has data points that could be an invaluable metric for advertisers. Its platform could also be integrated to enhance an existing social media or internet service. There's also a big push to mobile these days, and Foursquare is already present there. Sam Hamadeh, CEO of private research company, Privco, says the the company "could be worth more as part of a bigger buyer's play on local mobile ads and commerce. Groupon acquiring Foursquare for example wouldn't be out of the question."Yahoo! (YHOO) is another company that's been named as a possible acquirer of Foursquare. CEO Marissa Mayer is rumored to be fond of the social media service. And Yahoo's recently been on a shopping spree. Both Yahoo! and Facebook (FB) were reportedly interested in Foursquare in 2010, though a deal didn't come to fruition; perhaps talks could resume again. Foursquare CEO Dennis Crowley, however, may be wary of an acquisition. He's already experienced a failed acquisition, having sold Dodgeball to Google (GOOG) in 2005, only to have it later shut down. If he's passionate about the future of Foursquare, he'll likely want to make sure that his company finds a good home this time.
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