Foursquare's cofounder says the company's sale paid $0 to people who held its stock, a reminder that owning equity in a startup is not a guaranteed payout.
Foursquare, the location technology company, has been acquired by Infillion. According to cofounder Dennis Crowley, people who held the company's equity received nothing. He wrote on Substack that no money was offered for preferred or common stock. He says the outcome leaves him "heartbroken."
Crowley helped launch Foursquare in 2009. He apologized to the roughly 1,600 former employees who worked there over 17 years. He wrote that the ending makes it seem like their collective efforts were worth "nothing?" He also said the $0 result was buried in a 125-page PDF for the legal team, and that no single person stood up to own or acknowledge it.
Crowley left the CEO role in 2016. He kept leading Foursquare's research and development lab through 2021, then held a board seat. In 2019, Foursquare raised capital from The Raine Group, a private equity firm. Less than two years later, Gary Little became CEO. Little had been a managing director at Raine.
Crowley wrote that leadership "was unable to preserve the value it inherited or create new value during those six years." He said current and former employees reached out with frustrations about leadership. He pointed to the company's Glassdoor reviews, which rate it 2.1 stars out of 5.
He did not put all the blame elsewhere. His decisions as CEO led to the need for private equity money, he wrote, and he wishes he had been louder on the board.
The Raine Group did not respond to a request for comment from Business Insider. Calynn Krieger, an executive vice president of marketing at Infillion, said Foursquare had "remarkable technology and a talented team." She added that Infillion has nothing to say about former leadership but is glad the business and its value continue.
Equity is a share of ownership in a company. Founders, employees and early backers often hold it, sometimes in place of higher pay. This story shows that a company being sold does not mean equity holders get paid. The material does not say what Infillion paid or how the money was divided.
The article does not give the sale price or the full terms. It also does not include a response from Raine or Little to Crowley's claims. Those details would help explain how a sale ended with nothing for equity holders.
Crowley's advice to founders, given in a footnote, is to love the company they build but not deny themselves closure and a chance to move on just because the company has not yet had an exit or ending.
If you take equity instead of pay, or invest in a startup, a sale can still leave you with nothing, so ask how payouts work before you count on it.
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