Square Circles Struggling Social App Yik Yak

Square Circles Struggling Social App Yik Yak

Sequoia has put anonymous messaging app Yik Yak up for sale, as first reported by Fortune, and payments company Square (NYSE: SQ) has emerged as the most likely buyer for the embattled startup, according to The Verge.

The deal would most likely be an acquihire in which Yik Yak’s team would reportedly join Square, but the fate of its technology is uncertain. Because of the nature of the transaction and the major drop in Yik Yak’s user base—and the almost-certain drop in its value—the sale is unlikely to provide backers with much of a return on their investments. The news comes a few months after the Atlanta company laid off 60% of its staff, or 20 employees, a development that appeared to be in line with the app’s waning popularity.

Yik Yak has seen major ups and downs since it was founded in 2013. The year after its founding, the company had raised a total of $75 million, including a $60 million-plus round led by Sequoia at a valuation of $400.5 million. Leading up to that large round, the company’s app had seen a surge of user growth, mostly in college settings, where students used it to comment anonymously on campus life.

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But soon after Sequoia made its big bet on Yik Yak in late 2014, the app’s popularity began declining. Reports emerged that the secret nature of the service led to cyberbullying, and although the app’s developers built tools to curb harassment, the company had already begun its descent. In April 2016, TechCrunch reported that the app’s monthly user count was steadily dropping and continually missing growth goals. By the time the substantial layoffs came this past December, it looked like Yik Yak’s fate was written in the stars.

Source: The PitchBook Platform

Yik Yak-Square

Something worth noting, as Dan Primack of Axios points out, is that Roelof Botha of Sequoia sits on Square’s board of directors.

If Square is the eventual buyer, it’s unclear what the company would do with Yik Yak’s technology, according to The Verge. Regardless of whoever ends up purchasing the struggling company, co-founders Brooks Buffington and Tyler Droll are unlikely to make the move, per reports.

Check out Yik Yak’s free profile. to see the company’s investors, management, fundraising history and more.

Article by Dana Olsen, PitchBook

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