It isn’t new business, but geolocation technology is fast becoming big business. The success of location-based social networking technologies from private companies like Foursquare and the The Hotlist, among others, has venture capitalists and investors keen to get their money behind the next big social technology trend.
AeroScout is the latest company in the field of real-time location systems to receive an impressive financing push. The company has gathered together $16 million after its latest round of raising capital. Evergreen Venture Partners join Cisco Systems (NASDAQ: CSCO), Intel Capital (NASDAQ: INTC), Star Ventures, Menlo Ventures and Pitango Venture Capital in backing AeroScout. Considering the hype surrounding newly launched businesses like location-based UK social network Geomium, those groups are wise to see the potential in AeroScout’s RTLS tech.
For the uninitiated, geolocation technology is an umbrella that includes technologies ranging from smartphone apps to social networking websites that invite users to simply post information regarding their current whereabouts. Buzz Media Entertainment’s Plixi, the Apple (NASDAQ: AAPL) iPhone app formerly known as TweetPhoto, is a prime example: The Plixi app is a piece of software that works in tandem with existing social networks Facebook, Twitter, LinkedIn, MySpace, and other geolocation technology, like Foursquare which lets users upload photos to those networks and share information based on their location.
A user sitting in Barnes & Noble (NYSE: BKN) uploads a picture of themselves through Plixi on their iPhone, that photo goes to their Twitter and Facebook pages, and that user can then see which of their friends are close to their location, as well as what other businesses are nearby. Plixi themselves have raised $2.6 million in funding, modest but impressive nonetheless.
The spread of geolocation technology and services is thanks in large part to consumer interest, but geolocation tech has a number of obvious business applications. While it still isn’t being exploited to this end by agencies, geolocation tech represents the next evolution in contextual advertising. Twitter geolocates users updates and then links them to “places of interest,” passive service that could potential drive consumer traffic to physical locations rather than raising brand awareness. Geolocation networks Foursquare and Gowalla (who currently has more than $8.4 million in funding from investors including Greylock Partners) have partnered with companies like News Corps.’ AskMen.com, NBC Universal‘s (NYSE: GE) Bravo cable channel and Starbucks (NYSE: SBUX) to present targeted, location-based advertising directly to users.
Given how recent the technology has proliferated in consumer enterprises, though, it’s unsurprising how geolocation tech is still largely unregulated. Concerns over user privacy hasn’t stopped the growth of Foursquare and others, but the problem of users’ broadcasting not just personal information but their physical location could lead to regulation at a later date. Some companies have already began self-regulation geolocation tech usage—while Apple’s iAd, Yahoo! (NASDAQ: YHOO) advertising, and Google (NASDAQ: GOOG) Ads all user geolocation technology, they restrict advertiser usage of the tech. Last February, Apple banned the usage of geolocation in iOS apps for use as advertising.
For investors interested in how to leverage the trend to bolster their portfolios, the wisest course of action is to watch companies like AeroScout over the next eighteen months, wait to see what kind of partners they accumulate, and watch for acquisitions by larger companies.
As of this writing, Anthony Agnello did not own a position in any of the stocks named here.
