Will Zomato’s Urbanspoon Buy Trigger a Foursquare Acquisition?

This morning India-based restaurant search provider Zomato acquired Urbanspoon from IAC for more than $50 million in cash. With the acquisition, Zomato will now operate in 22 countries including the US and Canada.

Zomato wants to be the leader in every market it enters. The company said in its press materials that it’s “already a dominant player in . . . India, the UK, Europe, South East Asia, and South America.” The Urbanspoon acquisition comes in the wake of a flurry of other, similar acquisitions in New Zealand, Poland, Czech Republic, Slovakia, Italy and Turkey.

How will Zomato impact Yelp, YP, TripAdvisor, even its booking partner OpenTable? The Urbanspoon brand is going to be shuttered fairly quickly and a Zomato-branded site/app, featuring Urbanspoon listings and content launch in or around March of this year.

The sites listed above are broader than restaurants, although restaurants is a critical use case and category. From what I’ve seen so far Zomato doesn’t have any major differentiators. In some respects it’s the second coming of Qype. The company is going to start testing mobile payments, which OpenTable is now doing but Yelp is not.

If Zomato catches on in the US and does roll out payments we might see such a move put some pressure on Yelp to get into payments, directly or indirectly. That would be very interesting for many reasons, including analytics/ROI. But there are several “ifs” in that scenario.

More immediately I think about Foursquare and how a potentially powerful new market entrant might affect the New York based company. In October of last year Foursquare released some usage metrics that seemed to show growth following the bi-furcation of the company’s apps into Foursquare and Swarm:

  • 55 million registered users (though it hasn’t disclosed active users)
  • Post-Swarm Foursquare “saw a 54 percent lift in users compared to the same month 2013″
  • A third of users are just on Foursquare, a third only use Swarm and a third use both monthly
  • Foursquare now has 50 million tips (tips per active user are up 116 percent since Foursquare relaunch)

Despite this seemingly upbeat information the site has many skeptics who believe its time has come and gone. The company has plenty of money in the bank but does it have any momentum?

It’s quite possible that Zomato’s presence in the US will now trigger renewed attention for Foursquare among some dormant but potentially interested buyers. I don’t believe that the company is a candidate to go public.

There are numerous potential buyers out there, including maybe Yahoo, Google, Facebook, Microsoft, Samsung, Alibaba and others. The real question is: how much? Foursquare’s most recent (known) valuation was back in 2011 at around $700 million according to several sources.

Foursquare would have been a bigger prize than Urbanspoon for Zomato, but was clearly too expensive. However the acquisition of Urbanspoon could create a moment of opportunity for Foursquare to shop itself.

Facebook to my knowledge has never been linked to any potential Foursquare acquisition rumor. However in my mind that’s the most interesting potential buyer. But what Facebook would be willing to pay for the company’s data and engineers is probably different than what Foursquare wants to be acquired.

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