Foursquare Gets $41 Million Investment, Time to Grow
When Dennis Crowley debuted Foursquare, his location-based social media app, at South by Southwest in 2009, he got rave reviews. The tech blog Mashable called Foursquare the “breakout mobile app” of the event. VentureBeat called it “the next Twitter.”
Context & Ripple Effects
Foursquare’s financing follows a 2011 fundraising effort and a $50 million round that valued the company at $600 million. It also came after Foursquare began building partnerships, indicating that expansion depended on both capital and distribution.
The company updated its iOS app to make search more prominent a day earlier, giving the new financing an immediate product-growth context rather than treating it solely as a balance-sheet event.
First-order effects
- Foursquare gains $41 million to fund growth around its location-based service and its newly emphasized search experience.
- Dennis Crowley and Foursquare can pursue expansion without relying only on the capital raised in 2011.
Second-order effects
- Foursquare’s partners gain a better-funded platform through which to reach location-aware users, raising the value of continuing those distribution relationships.
- The investment puts pressure on other mobile social products seeking similar consumer attention to show that their growth plans can attract late-stage backing.
Third-order effects
- The round reinforces a funding pattern in which consumer mobile services that establish early traction can return repeatedly to private investors to finance scale.
- If investors continue funding location-based platforms at this stage, competitive advantage will depend increasingly on the capital available to improve product discovery and partner reach.
The trend: Consumer mobile platforms are using successive late-stage financings to turn early social traction into broader product and partnership networks.