Location-based social media app Foursquare managed to turn over only USD 2 millon in 2012, someone familiar with the company’s finances told Bloomberg. The service allows users to inform friends that they have “checked-in” to a bar or store to earn virtual badges and real discounts, but has failed to generate advertising revenue because its customers are not aware that the app offers a search function that carries ads geared to their location, according to the report.
Yet the author is bullish on Foursquare’s chances, despites analyst statements to the contrary, because by staying private it has not exposed itself to the vagaries of its share price. The company will play an important card this summer when it opens up its advertising system to the 1.3 million merchants who are listed on its site, compared to only about 50 hotel and retail chains at present.
Foursquare will also expand its sales team and update the app to highlight its search function. Over 40,000 apps have integrated Foursquare’s platform, allowing it to collect data from apps such a mobile social network Path, Instagram and Vine. Foursquare has been used by 33 million people, according to CEO Dennis Crowley.
It reported on its blog that it had raised USD 41 million of debt financing to drive its expansion. The loans came from the Silver Lake Waterman growth debt fund, as well as convertible debt from all existing investors (Andreessen Horowitz, O’Reilly AlphaTech Ventures, Spark Capital, and Union Square Ventures).
