The 27-employee firm closed Tuesday on Series B capital from Union Square Ventures, O'Reilly AlphaTech Ventures, and its newest partner, Andreessen Horowitz, founded by Silicon Valley legends Marc Andreessen and Ben Horowitz.
"With this new round of financing, our main priority will be to expand our organization to supplement the amazing core team we've assembled already," said Foursquare CEO Dennis Crowley in a company blog. "We’re hoping to build a world-class engineering organization, based primarily in our headquarters in New York City, to help us develop the next generation of mobile + social + local products that will excite our users and provide unique value for local merchants. The new investment capital will also help fund the infrastructure needed to house our team... and support our growing audience of nearly 2m users."
About 10 months ago, Foursquare got $1.35 million in first-round financing from Union Square Ventures, O'Reilly AlphaTech Ventures, and several angels. Today, the company has 1.8 million users, up from 750,000 in March, Crowley said.
Both Facebook and Yahoo apparently courted Foursquare before the company opted to remain independent, according to published reports.
In 2005, Google acquired Dodgeball, a five-year-old location-based social networking software provider for mobile devices co-founded by Crowley and Alex Rainert while they were students at New York University, according to Wikipedia. Two years later, Crowley and Rainert left the company; Google discontinued Dodgeball in January 2009 and rolled out Google Latitude a month later.
Although Foursquare is not-yet profitable, some businesses -- such as Starbucks, Bravo/NBC, and Conde Nast -- are using Foursquare as a marketing platform, according to Opus Research.
"Foursquare is better thought of as a new type of mobile-centric social city guide," the research firm said. "Many SMBs are also experimenting with the site as a local marketing platform.
"It's very tempting to dismiss 'geo-social games' such as Foursquare, Gowalla, and MyTown as fads. Yet doing so would diminish how these apps alter the culture of local mobile search and even location-based 'advertising' in potentially significant ways. Recognizing the challenge, Google and Yelp have already responded," Opus Research said. "But other local media companies hoping to succeed in mobile may not clearly see the threat -- or opportunity -- in emulating, buying, or partnering with these emerging players."