Dennis Crowley, Foursquare’s remaining co-founder gets kicked up to the boardroom, “of his own volition.” In news that may or may not be connected, 4sq gets yet another honking chunk of change to burn through—but the price is said to value Foursquare at way less than it was worth previously.
This will be the Series-E round, worth $45 million, led by Union Square. Other investors number Morgan Stanley, DFJ, Andreessen Horowitz, and Spark.
Presumably one or more of these VCs weren’t keen on Crowley’s performance at the location-based service, so asked him to tag in the old COO and CRO. Meanwhile, he’s been asked to “make something awesome.”
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[Developing story: Updated 8:51 am PT with more comment]
So the CEO makes a sacrifice? Mike Isaac laughs—Foursquare Raises $45 Million, Cutting Its Valuation Nearly in Half:
When Dennis Crowley helped found Foursquare in 2009, he was ahead [with] a social app that used location technology.
Foursquare [says it] raised $45 million in a new round of venture funding, [which] pegs Foursquare’s valuation at roughly half [of] that it was valued at in...2013, according to three people...who spoke on the condition of anonymity.
Investors have grown more cautious; the amount of money funding private companies has fallen 30 percent...in the last quarter of 2015 from the previous quarter, according to...Anand Sanwal, chief executive of CB Insights. ... “The short of it is, expect more down rounds.”
Crowley...is stepping down as chief executive. ... “Everyone thought we were going to be the company that toppled Facebook, which is crazy talk.” [The] valuation plunge reflects how the buzz around the company...has faded.
Unfortunate, that. Erin Griffith reports that Foursquare Gets a New CEO and More Funding:
Crowley has relinquished his chief executive role to Jeff Glueck, the company’s [COO]. [CRO] Steven Rosenblatt will become president.
Foursquare declined to comment on the valuation. ... Reports on the funding said the round would value the...app maker at $250 million, a significant haircut [from] $650 million.
Even when the location-based app was at the top of the hype cycle in 2009, it had plenty of critics.
Rosenblatt and Glueck tout revenue growth [but] were light on all details...which makes it difficult to accept the rosy picture at face value. ... If everything is awesome, why relinquish the CEO role?
Where is the horse’s mouth? Ex-CEO Dennis Crowley writes of Leveling Up at Foursquare:
It’s been just about seven years since...we’ve grown from “crazy idea”...to successful business. ... The company has grown into something so much bigger and broader than we ever imagined in 2009.
I felt like now is the right time to put our strongest executives in the company’s top leadership positions. I’ve asked our COO Jeff Glueck to [be] CEO, and I’ve tapped our CRO Steven Rosenblatt to be President.
I will be stepping up into the role of Executive Chairman [which] allows me get back to the “let’s just make something awesome that people love” spirit [and] make sure those things get built.
I’m so excited about what’s to come in 2016 and beyond.
So Crowley doesn’t see himself as a strong exec? Here’s Jenn van Grove’s analysis:
Loved 4sq until I didn't. Surely there's money in local data but down round = hail mary.
Not a vote of confidence.
But not everyone sees it like that. Anil Dash, for example:
I remain convinced Foursquare is one of the most innovative & interesting platforms.
Dennis Crowley...should be proud.
So what’s next? It’s the usual exit dichotomy, says Matthew Panzarino—Foursquare Gets $45M And A New CEO:
Foursquare has been a fantastic idea in search of a business plan for as long as it’s been alive.
The location confidence business that Foursquare has built up...provide it a unique opportunity.
If Foursquare is able to take this latest lease on life to make a booming business out of its Pilgrim data, then...users that get enough benefit out of it...will finally be able to rest easier.
[Or] Foursquare could build a solid enterprise business that is just ripe enough for a company...to pluck for a choice sum when its runway runs out.
Update: But why did the VCs decide to throw yet more money at this loss-making business? Union Square’s Albert Wenger ventures to suggest why, in Building the Business:
The company's location data now enriches the experience of 50 million people.
The same data also powers two rapidly growing B2B business segments: Pinpoint, a programmatic ad platform, and Enterprise Solutions which include foot traffic analytics and a places API...used by Apple, Twitter and more.
Now the company is on the path to profitability...as an independent location intelligence company.
There is a fantastic leadership team in place to guide this next phase...with Jeff taking over as CEO.
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