The funding deal, led by Silicon Valley venture-capital firm Andreessen Horowitz, is likely to be announced as early as this week.
The company had held serious acquisition talks with Facebook Inc. and with Yahoo Inc., said people familiar with those discussions. Yahoo and Facebook declined to comment.
“Foursquare is an outstanding startup, and we have a lot of respect for [Chief Executive] Dennis [Crowley] and his team,” said Andreessen Horowitz spokeswoman Margit Wennmachers.
It wasn’t clear how much Foursquare will raise or what valuation investors have placed on the New York company through the funding.
Location based services continue to gain momentum in the marketplace despite many finding their limitations rather quickly. The questions of “Is that all there is?” and “What do I do now?” are the ones that are likely to be answered by an influx in cash to foursquare. Having the money to develop new options and other ways to potentially monetize the service are top of mind for all.
Part of the fun of this whole process is wondering just what kind of valuation foursquare will receive with this round of funding. It has taken $1.35 million from Union City Venture back in September of 2009. It’s anyone’s guess. What does not need to be guessed is its popularity. Since its March 2009 inception the service has developed rapidly.
Foursquare has 1.7 million users, up from about 750,000 in March, Mr. Crowley, a co-founder, said in an interview Friday.
“We are picking up 100,000 users every 10 days,” Mr. Crowley said. Almost half use the service by checking in at least once a month after signing up.
The company has 27 employees, up from five in January. It is hiring software engineers and product managers as it builds out the service. Some come from top companies such as Google, said Mr. Crowley.
The questions surrounding foursquare and the geo-location industry in general are about just how these services can truly be used by businesses and will there be a willingness to pay for ancillary services and offerings. For foursquare, in particular, the biggest questions are around competition and not necessarily from other start-ups like Gowalla. No, foursquare and all of the “little guys” are keeping a close eye on the “big boys” like Facebook, Twitter and, of course, Google to just how they will enter this market and if the effect will help smaller players grow, be acquired or get pushed aside.
Lots of things to speculate about but precious little hard data to use as a basis for it. If it’s taken Twitter this long to ‘figure things out’ even to the minor degree that they have it is likely that we will be wondering “What’s next?” for this entire geo-location industry for some time to come.
UPDATE: Rumor confirmed. $20 mil in with Andreessen Horowitz as the lead with valuation at $95 mil. WSJ story here.