Foursquare Raises $20 Million Series B Round

As widely rumored over the past few weeks, Foursquare has been working on a series B funding round, which it finalized today to the tune of $20 million. The round was led by Andreessen Horowitz and included existing investors Union Square Ventures and O’Reilly AlphaTech.

The funding will be used to expand headcount and much needed office space for its quickly burgeoning staff of 27. It will invest specifically in engineering and product teams to evolve the core product’s feature set. Founder Dennis Crowley has been outspoken about constantly evolving the user “value exchange” in such a dynamic mobile market (we agree).

Still, the “obvious” path to monetization from Foursquare and others, continues to be tapping into the long-tail SMB segment where mom-and-pops will presumably self serve local promotional campaigns. But as we keep saying … it won’t be that easy. Just ask Google, which has gone further than anyone but continues to struggle penetrating the segment.

The latest evidence of this misguided thinking came from lead investor Ben Horowitz. From TechCrunch:

As far as making Foursquare a great company that makes a lot of money, Horowitz says the “monetization” opportunities are “very obvious and straightforward.” There are many ways Foursquare can start charging businesses once it reaches a larger scale. “Would you pay to know your most frequent customer?” Horowitz asks rhetorically. “Probably.” The bigger issue is how to take Foursquare from nearly 2 million users to tens of millions of users and beyond.

I agree, in logic. But SMBs often defy logic. You’ll find soon, Ben, that small businesses act in inconsistent ways and aren’t as “obvious and straightforward” as you think.

Leave a Reply

Your email address will not be published. Required fields are marked *

seventeen + sixteen =

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>