Leaving behind acquisition offers from Yahoo and Facebook

Jun 30, 2010 08:16 GMT  ·  By

There’s been a lot of activity surrounding Foursquare lately and certainly a lot of hype. The service has become the front-runner in the new wave of location-based services and it managed to get the attention of investors and of some big-name companies, like Yahoo and Facebook. With rumors of acquisitions flying around, Foursquare actually took the more courageous path and went with a founding round instead, getting $20 million from several venture capital firms.

“[W]e’re excited to announce that we’ve raised another round of capital. Today we closed on a $20m Series B round with Union Square Ventures, O’Reilly AlphaTech Ventures and our newest partner, Andreessen Horowitz,” Dennis Crowley, Foursquare founder and CEO, announced.

“We’re thrilled to have the continued support of our original investors and additional support and expertise from the team at Andreessen Horowitz. The two big names behind Andreessen Horowitz - Marc Andreessen and Ben Horowitz - are each legends in Silicon Valley,” he added.

Foursquare says it will use the funds to ramp up development. It plans to hire more engineers and is already moving to bigger offices. Crowley says there have been a lot of great ideas over the past months and the company can finally set about building them without having to worry about the monetary issues.

Foursquare was heavily courted by several companies interested in the hottest web startup of the moment. Yahoo made a couple of generous bids, north of $100 million, though that course of action was criticized by many. Clearly interested in location-based services, Yahoo later acquired an Indonesian startup focused on the same market. Many feared that the acquisition would destroy Foursquare the way plenty of other companies that had been acquired by Yahoo did.

Facebook was a more interesting choice and it also wanted to buy Foursquare. The service would have been a great fit for the social network, but, again, it had probably meant the death of Foursquare. So the startup opted to stay independent and build its product. Adding 15,000 new users every day and having grown from one million users in April to 1.8 million now, it was probably the smartest choice.