Foursquare has been teasing a revamp to its mobile app, and it looks like its going to shift from being centered on check-ins to centering on exploring your world. We have screenshots here.Foursquare is going to become Yelp 2.0. It’s a more social way to help people find restaurants, bars, and other shops.
This is a great idea, but there’s one problem if you’re a Foursquare investor. Yelp’s current market cap is $960 million. Foursquare’s last round valued the company at $600 million.
Unless Foursquare drastically improves on Yelp’s user experience and revenue, odds are that Foursquare’s last investors aren’t going to see a big return.
And if Foursquare wants to raise more money, it’s going to have to prove it’s significantly better than Yelp. Like, 5X better.
This is the clearest example of how the public markets’ bad reaction to tech IPOs could affect private market valuations.
Tech pundits have been denying that we’re in any kind of tech bubble. And one of their big defenses is that the public market valuations are entirely reasonable.
OK, fine. But those reasonable public valuations are going to start creeping back into the private markets.
Kleiner Perkins’ partner Mary Meeker said this week that in the first quarter of the year, her firm didn’t invest a penny of the $1 billion it has to put into digital startups, because it couldn’t get comfortable with startups’ valuations.
She then added that some of these companies are going to smacked in the face with the reality of public market exits, because, the public market just isn’t that into tech.
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