Foursquare has recently passed the 20 million user mark and has raised millions in funding, but how does the popular app make money?
Right now, Foursquare makes money from marketing program partnerships, an example of this is it’s deal with American Express; it allows you to find special deals on the American Express membership program and you can also connect your Amex card to your Foursqaure account.
Daily deal partnerships; Foursquare offer daily deal partnerships which local businesses from companies like Living Social, Fourqaure will then receive a percentage of the business it sends to these companies.
Even with these deals Foursquare isn’t making much money at all and so far no real plans for revenue in 2012. They have introduced a new system that allows users to instantly verify locations for $10 but this is to deter spammers and improve customer service rather than a stream of revenue.
Foursquare directors obviously want to focus on the user experience rather than revenue and with 0 revenue companies like Instagram checking out for a billion dollars, something tells me they are in n rush to monetise their fast growing product.
Another reason maybe that they have no idea how to monetise Foursquare, and possible just building the product to a billion dollar plus buy-out. Who knows. They won’t have any trouble raising more rounds of funding with investors hoping for the next big buy-out.