According to an article at The Wall Street Journal, Foursquare is looking to raise $20 million to $40 million in a move that would value the location-based company at as much as $500 million. And although Foursquare keeps growing like crazy — it now has 8 million users — that valuation could be a stretch for the three-year-old start-up.
The problem is in the business model which at the moment doesn’t bring enough revenues to Foursquare. Moreover, they are facing an increased competition from the likes of Gowalla, Google and Facebook. Plus there’s Groupon, which recent acquisition of Pelago (maker of the check-in service Whrrl) indicates the company’s interest in the checking-in business.
As a reminder, Foursquare has recently struck a deal with American Express to offer discounts to cardholders. The new service was launched on a trial basis at the South By Southwest conference in Austin, Texas, and the plan is to roll it out to more cities.
Last time Foursquare raised funds $20 million from Andreessen Horowitz in the summer of 2010.
[Via: WSJ]