Foursquare, the social networking company that lets users “check in” to locations using mobile phones, has taken its first significant round of funding after acquisition talks sputtered.
The $20m series B investment was led by Andreessen Horowitz, the venture capital firm founded by Netscape founder Marc Andreessen. Other investors include Union Square Ventures and O’Reilly AlphaTech Ventures. The deal values Foursquare at $95m.
Andreessen partner Ben Horowitz said his firm chose to invest in Foursquare because of its huge potential market and fast early growth. With more than 4.6bn people using mobile phones and 1.7bn on the internet. Mr Horowitz also said Foursquare was growing faster than Twitter did at this stage, as it adds 15,000 users a day.
Foursquare remains a tiny company, with just 27 employees. But the service is growing fast, with 1.8m users now checking in around the globe. It has also struck deals with a number of high-profile media companies, including The History Channel, VH1 and The Today Show.
Foursquare says it will use the new money to hire engineers, build out the back end of the service, and move into a larger office space. Until now, Foursquare has been sharing office space with other startups.
For months Foursquare was rumoured to be on the verge of being acquired, first by Yahoo, then by Facebook. Those deals never panned out, though Yahoo was reportedly offering as much as $100m for the company as part of its drive to build its social networking presence.
But Foursquare is opting to grow independently, and Foursquare chief executive Dennis Crowley said he wanted Andreessen Horowitz as lead investors because of the team’s expertise.
“They know better than anyone how to transform startups into successful organizations,” said Mr Crowley in a blog post. “As we continue to rapidly expand to take advantage of the opportunities in front of us, Ben [Horowitz] and Marc’s expertise in growing companies will be invaluable.”
Yet Foursquare faces an increasingly competitive landscape. Yelp, the popular user reviews site, is allowing users to check in, and Facebook, the world’s largest social network, is working on a similar feature.
