It’s important to remember valuations of companies are completely made-up numbers.
When Dennis Crowley helped found Foursquare in 2009, he was ahead of the pack in creating a social app that used location technology. Now Foursquare may be at the front of another coming wave: tech start-ups that are raising money at lower valuations than before.
On Thursday, Foursquare said it had raised $45 million in a new round of venture funding, as it tries to bolster its location data-based advertising and developer businesses. The financing pegs Foursquare’s valuation at roughly half of the approximately $650 million that it was valued at in its last round in 2013, according to three people with knowledge of the deal’s terms, who spoke on the condition of anonymity.
I’ve still never used Foursquare. I’m not saying I don’t see the value in the service, I’ve just never had any incentive to use it.
It’s good to see some of these companies (somewhat) come back down to earth with their valuations.
It’s important to remember valuations of companies are completely made-up numbers. Sure, they’re supposed to be grounded in user data and other metrics, but they’re still—at best—educated guesses. Guesses that can completely change when the competition changes.