What Foursquare will do with its $20 million

By Laurie Segall, CNN


NEW YORK (CNNMoney.com) -- What does one of the hottest mobile app startups do when it closes a $20 million funding round? Buy chairs.

"We haven't been hiring because we don't have the places to sit people," Foursquare founder and CEO Dennis Crowley said Wednesday of his venture's plan to move to a bigger office. "We have a deep and ambitious road map, we just need people to carry it out."

Venture fund Andreessen Horowitz, and previous investors Union Square and O'Reilly AlphaTech Ventures invested in Foursquare's second round of funding, which added to the $1.4 million the New York-based startup raised last year. This week's round valued Foursquare at $95 million, pre-investment.

The location-based social network allows users to "check in" to different venues and tout their whereabouts; businesses can use it as a marketing tool to lure in and reward their regulars. Crowley plans to use the new cash to hire more engineers and customer service employees to address the network's growing demands: Foursquare is nearing 1.8 million user mark and adds an average of 15,000 users per day.

Andreessen Horowitz, a Silicon Valley fund backed by Netscape co-founder Marc Andreessen and Opsware co-founder Ben Horowitz, chose not to invest in Foursquare during the company's first money hunt. This time, the company's rapid expansion and revenue potential earned it a green light.

"We are very excited about Foursquare's ability to make money in a way where all parties win: users, merchants, venue owners, brand advertisers, and more," Ben Horowitz wrote in his blog. Foursquare is growing faster than social networking site Twitter did at this stage, he noted.

But like Twitter, Foursquare has a business model that's still evolving. The startup plans to expand its marketing partnerships; its current roster includes companies such as Starbucks, Zagat, and Marc Jacobs.

It's rumored that Foursquare has been in acquisition talks with major players like Facebook and Yahoo, but for now Crowley says he intends to continue expanding independently. Crowley's last experience with being bought was famously unhappy: He and partner Alex Rainert sold an earlier mobile-app venture, Dodgeball, to Google (GOOG, Fortune 500) in 2005. The pair quit two years later, calling the fight for resources at Google "incredibly frustrating."

But for now, Foursquare is in celebration mode. Team members headed to their East Village haunt "The Scratcher" Tuesday to commemorate the funding deal, which came just in time for Crowley to head off to South Africa to attend a round of World Cup games.

"I was hoping I'd be able to go," Crowley said, adding that he'd been waiting to see the deal through before jumping on a plane. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,071.22 -41.93 -0.25%
Nasdaq 4,505.85 -6.34 -0.14%
S&P 500 1,977.80 -5.05 -0.25%
Treasuries 2.49 -0.04 -1.74%
Data as of 2:09am ET
Company Price Change % Change
Ford Motor Co 15.11 -1.22 -7.47%
Bank of America Corp... 17.01 -0.02 -0.12%
Apple Inc 100.11 -0.64 -0.64%
Yahoo! Inc 40.52 -0.14 -0.34%
Facebook Inc 79.00 0.21 0.27%
Data as of Sep 29

Sections

This is Wal-Mart's latest move to build up its online presence as it struggles to compete with retailers like Amazon. More

As demonstrations continue to disrupt normal operations in Hong Kong, both experts and residents are considering the long-term impact that the pro-democracy protest will have on the international finance hub. More

CNNMoney's Jose Pagliery breaks down the shellshock vulnerability and explains which devices could be affected. More

On Wednesday, 17% of First Green Bank's 66 employees will get a raise under the company's new "living wage" program. The guarantee: At least about $30,000 a year. More

Despite service that 'sucked,' an Iowa couple leaves a $100 tip for the waiter to prove a point about kindness and the life of a waiter in America. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.