Foursquare Raises a $35 Million Round and Adds DFJ's Schuler to Board
Foursquare, the iconic social location service, has raised $35 million in a Series D round, led by DFJ Growth and the Capital Group's Smallcap World Fund. — The company confirmed the raise to me and later in a blog post …
Context & Ripple Effects
Foursquare has been on a long funding arc: a $1.35 million seed from Union Square Ventures in 2009, a search for fresh capital reported in April 2011, and a $50 million round at a $600 million valuation that June. The $35 million Series D announced December 19, 2013 is smaller than that 2011 raise, and the lead investors mark a shift — growth-stage firm DFJ Growth alongside the Capital Group's Smallcap World Fund, a mutual-fund vehicle rather than a classic venture shop.
The raise lands three weeks after the version 7.0 release brought proactive recommendations to all users, building on October's automatic nearby-place alerts that work without the app being opened — a product turn that leans on the company's check-in database to revive engagement. The story traveled widely for a mid-size round, picked up same-week by The Verge, TechCrunch, WSJ's Digits and five other outlets.
First-order effects
- DFJ's Schuler joins the board with the round closed, giving the lead investor direct governance input as Foursquare scales its ad products on top of the check-in database.
- The capital extends runway behind the passive-alert strategy launched with version 7.0, where notifications reach users who never open the app.
Second-order effects
- Rivals in local discovery and social location now compete against a service whose engagement loop no longer depends on users checking in or even launching the app, pressuring them toward their own background-notification plays.
- Smallcap World Fund's participation signals to other late-stage consumer startups that mutual-fund crossover capital is available outside traditional venture syndicates, widening the pool for comparable rounds.
Third-order effects
- If the passive-notification pattern holds, the value of a check-in service migrates from explicit user actions to the ambient location data underneath, reshaping how such companies are priced and acquired.
- Crossover investors like the Capital Group taking lead roles in private growth rounds further blurs the line between venture and public-market investing, a structural change in how late-stage consumer internet companies get funded.
The trend: Late-stage consumer internet rounds are drawing mutual-fund crossover capital while location services reposition around passive, data-driven notifications rather than active check-ins.