Foursquare raised $50 million in cash in June 2011 when it was valued at $600 million. Now, according to Crain’s New York Business, it’s “a poster child for questions about the future of social-media startups.”
The company has a burn rate of $2 million a month and with its 2012 revenue of $2 million, it risks running out of cash. But backer Fred Wilson of Union Square Ventures says the company won’t be sold off in a fire sale. He told Crain’s that the startup will be raising money soon and will be profitable “in the next year or two.” But analysts aren’t so sure. They believe Foursquare’s glory days are over and people have moved on while other companies including Facebook, Google+ and Yelp have beefed up their location-based services. Sam Hamadeh of PrivCo, predicts it won’t be able to raise funds and will be sold. A company with such a high valuation, he said, should have explosive grow.