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Stupidly hot mobile startup Foursquare is taking all kinds of offers from brand name VCs and Silicon Valley behemoths looking to buy.We’ve been tearing up the phone lines trying to figure out what’s going on.
Digital Sky Technologies, the Russian firm that’s invested in big winners Facebook, Zynga and Groupon, flirted with Foursquare a bit at SXSW this year, but the firm isn’t interested — not yet, at least. DST invests in late stage startups, primarily.
The general consensus/speculation is that Andreessen Horowitz partner Ben Horowitz publicly backed out of the race for Foursquare because, to use one source’s analogy, it was like the nerdy boyfriend in high school dumping the hot girlfriend because he feels like she’s about to dump him. Word is Andresseen Horowitz was in talks and a contender through last weekend, prior to dropping out Monday.
People close to Foursquare say that, among VCs, Khosla Ventures partner Gideon Yu has basically beaten out Accel, Red Point, and Andreessen Horowitz to win Dennis Crowley’s favour. But sources say even the conversation between Khosla and Foursquare has fallen off of late.
We wonder if all this silence between Dennis and west coast VCs means Dennis is talking to someone on the east coast. One candidate is Spark, out of Boston. Spark followed Union Square Ventures into Twitter, and Foursquare is a Union Square Ventures portfolio company, too.
Another reason for the silence? We hear Yahoo is very serious in its pursuit of Foursquare. A CEO at a Foursquare rival tells us Yahoo has met with everybody in the space and is intent on buying somebody. We wouldn’t blame Dennis for taking Yahoo’s offer (said to be $125 million seriously). He owns about 33% of the company (we think), so if he took the offer, Dennis would walk away with about $30 million in cold, hard cash. Yes, he sold his last startup to Google, but the price was less than $5 million and the guy is definitely not “Manhattan-rich” (though he has a nice apartment). Also, Dennis is very, very loyal to the guys he works with at Foursquare, and he’s probably interested in getting them rich, too. The big problem is, we hear Yahoo is refusing to promise him full autonomy over Foursquare after an acquisition.
The other big reason for Dennis’s delays is that now that everyone knows Foursquare was willing to listen to an offer from Yahoo — open the kimono, so to speak — lots of potential buyers are probably lining up to take a peek. Besides Yahoo, the most interesting names we’ve heard thrown around include IAC and Facebook.
It’s just pure speculation, but let’s explore those possibilities.
IAC owns CitySearch, so that would make some sense. But lately, Barry Diller has shown very little interest in social networks and a whole lot of interest in media. Also, Barry likes cheap deals. Foursquare isn’t cheap. There’s a slim chance we could see an IAC-Foursquare merger/spin-off, but wouldn’t that be the weirdest thing ever?
As for Facebook, everyone noticed that it didn’t announce a Foursquare-killing check-in feature at its developer conference yesterday the way the New York Times reported they would.Maybe Facebook held off because they’re in negotiations Foursquare? Facebook did try to buy Twitter in 2008 and we can’t help notice that the type of people users are “friends” with on Facebook are a lot like the type of people they’re “friends” with on Foursquare. Also, there were some rumours that Facebook kicked the tires on Foursquare rival Gowalla a couple months ago. Finally, one source close to Foursquare’s fundraising tells us: “It’s obvious what’s going on here. Dennis is going to sell to someone he admires.”
We would not be surprised to hear Dennis admires Mark Zuckerberg, who has created the second biggest consumer Web site on the planet and runs a company that still has that special startup feel to it that Google and Yahoo no longer have.
But really, when it comes to Facebook-Foursquare, we’re just speculating — echoing the rumours sprouting in the shadows of this fund-raising’s long delays.
For the record, Foursquare CEO and cofounder Dennis Crowley told us: “We’re going ‘no comment’ radio silence till we close this series B.”
Here’s the most important thing to remember: Foursquare doesn’t need the money. It took $1.35 million from Union Square Ventures last summer at a $6 million valuation and it hasn’t spent it all yet.
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