Foursquare is a location-based technology company that offers a range of location data and intelligence services to businesses and consumers. Before it reached its current form, it was widely known for its innovative social check-in feature.
It would be very interesting to analyze the pitch deck the founders used to fundraise $1.4M in their series A round when the company was still in its infancy stages - way before it had generated revenues.
A short history of FourSquare:
- 2009: Founded by Dennis Crowley and Naveen Selvadurai.
- 2009: Launched as a location-based social network and mobile app.
- 2010: Gained widespread attention and users, particularly at the South by Southwest (SXSW) festival.
- 2010: Introduced a feature called "Check-ins," allowing users to share their location with friends.
- 2011: Reached 10 million users and received significant venture capital funding.
- 2012: Split into two apps, FourSquare (focused on location discovery) and Swarm (focused on check-ins and social interaction).
- 2014: Announced plans to shift focus from social check-ins to location-based recommendations and discovery.
- 2019: Reached 13 billion check-ins and 105 million tips.
- 2021: Merged with Factual, a location data platform, to strengthen its location intelligence capabilities.
Venture capital funds usually invest in late-stage startups that have a validated concept and a business model that has proven to be able to generate revenue. This was not the case for FourSquare. While a big part of the reason undoubtedly is the startup investment climate back in 2009, it’s still interesting to see what arguments the founders of the startup used to convince their investors that the risk is worth taking.
1. Align To A Trend
Notice that the pitch deck utilizes two keywords very well: social networks and gamification.
These are familiar trends in the VC ecosystem, and back in 2009 when Facebook was still in the process of taking over the world these words were sure to spark investor attention.
Social networks were what people wanted back in the day. Of course, after quite a few social network startups failed to live up to expectations, these words are no longer magical.
Nonetheless, there are always new hot trends. At the time of writing this article, we just passed through the blockchain craze and entered the AI craze. Without a doubt, if your project “utilizes the power of AI to achieve X”, you’d have a higher chance of getting noticed. If AI is the next big thing (and it currently seems so post the success of Chat GPT), VC managers need to make sure there are some AI companies in their portfolio.
Before your business can stand on its own legs and before it has proven that it is viable and growing, it is a good strategy to align yourself to a trend that investors are already chasing.
2. Platform > Service
Notice the emphasis on the API that FourSqure is developing. This is significant because it shows that the founders view their app as a platform that other businesses can use for their own goals. This mentality has the potential to unlock much higher scalability for the company, especially in terms of revenue.
It shows that even though the startup isn’t generating revenue yet, there might be a B2B revenue line unlocked in the future. The location-based data Foursquare collects has clear value for businesses, including local merchants and national brands. Investors saw the potential for Foursquare to leverage this data to offer targeted advertising and marketing services in a similar way to how Facebook has leveraged its user data to become one of the biggest players in the digital ads market.
3. Proof The Idea Works
Consider that even though this presentation doesn’t have the usual graphs and numbers proving with data that the service/product is being used and growing, it leaves no doubt in the audience that FourSquare has found traction.
Foursquare's gamified approach to location sharing generates a lot of value. Users are motivated to check in to different places, unlock badges, and compete with friends for mayorships of popular venues. This gamification element not only made the platform more engaging but also encouraged user retention and frequent use and involved the actual venues to enter the game.
Slide 6 is one of the strongest in the pitch because it showcases real-world examples of the app features being adopted. They give the investors confidence that the concept has been validated.