Hot Startup Whacked Down 60%(!?) Whither the Tech Boom?

[marmar]

Hot Startup Whacked Down 60%(!?) Whither the Tech Boom?
by Wolf Richter • December 23, 2015


[font color="blue"]We hear a sharp hissing sound.[/font]

Foursquare, once a mobile app that allowed users to “check in” restaurants and stores when launched with great fanfare in 2009, and “once one of New York’s hottest startups” as TechCrunch ominously calls it, apparently needs cash desperately enough that it’s willing to accept a monstrous haircut.

It already raised $162 million in prior venture financing and debt. We don’t know how much of it is left and how much it burned through. But it’s time to go back to the trough – under punishing conditions.

Perhaps it’s the sound of hot air hissing out of the startup funding bubble where billion-dollar valuations for companies with no business model and no revenues have become routine: investors are suddenly looking at them with a more critical eye.

Foursquare is “close to finalizing” a new round of funding that would give it a valuation of only $250 million, Re/code reported. When it raised $35 million in 2013, it did so at a valuation of $650 million. So this round would be a devastating 61% haircut.

At its peak in 2012, Foursquare raised funds at a valuation of $760 million. From that level, its valuation got slashed 67%. ...................(more)

http://wolfstreet.com/2015/12/23/foursquare-valuation-whacked-60-what-does-this-mean-for-the-startup-tech-boom/

[TheFarseer]

1. It's a tough market right now.

And a weird market. It's following the price of oil around which makes no sense. Low oil prices helps an economy but big tradders use it as an indicator and instruct their computers to sell when it goes lower. It's completely backward. I'm trying to raise cash and lighten up on stocks.

[Lucky Luciano]

2. Oil going down has not yet led to good retail numbers.

So, traders are reading that as a significant amount of demand destruction for oil in addition to the oversupply. Low demand with low oil prices is what worries them.

[TheFarseer]

3. Interesting point

I just thought we were getting more fuel efficient but I guess I don't know. Either way, I think a recession is highly possible within the next 2-3 years.