With a new class of passive location apps on the rise, failed geo-mobile apps of the past need to cut their losses, so Loopt today announced plans to sell to banking and payment solutions company Green Dot for $43.4 million. Green Dot hopes checkin functionality can help it attain and hold on to customers by expanding from prepaid cards into a mobile wallet. And it needs Loopt’s talent to stick around to make that happen, so $9.8 million of the cash is reserved for a retention pool.
SXSW starts today and no one has been talking about Loopt. Had it waited until after the event and watched younger competitors revel in the spotlight, its valuation could have sunk, so this was wise timing to sell.
While Loopt was once a potential competitor to Foursquare and Gowalla, the checkin app space has thinned out over the last year. Foursquare showed dominance and became the clear leader, while Yobongo was acq-hired by Mixbook and Gowalla sold to Facebook rather than fight a losing battle. Apparently Loopt decided to follow Gowalla’s lead.
$43.4 million in cash is an impressive sum to have sold for compared to what the better-positioned Gowalla managed by many accounts, at least until that Facebook stock goes liquid. Loopt had taken $17 million in funding from Y Combinator, Sequoia, and New Enterprise Associates through its Series B. Green Dot has raised $33 million to date, much from Sequoia as well, [ed. it's a publicly-traded company] which could mean the firm pushed for the acquisition to protect its Loopt investment.
Green Dot will now have the means to let users announce when and where they make payments, which could power rewards systems. Also, Loopt’s mobile marketing messaging patents also made it attractive to Green Dot. They could help the banking and payment solution communicate better with its customers, or let it go on the offensive.