Exclusive: Foursquare Raises a $35 Million Round and Adds DFJ’s Schuler to the 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, which has been the subject of intense scrutiny amid many reports that the New York-based company was in big trouble and likely to have to take a down round to garner funding.
Apparently, not so. While not a big leap over its last valuation of $600 million, according to sources, Foursquare’s new investors pegged the worth at just over that. A Foursquare spokesman declined to comment on the valuation (and I could not determine if he was smiling over the phone or not).
As part of the investment, Barry Schuler of DFJ is joining the Foursquare board. The energetic Schuler, a well-known investor and was a key exec at AOL in the 1990s (and later CEO and Chairman) during its go-go-growth years, will definitely make a lively director.
In an interview, Foursquare CEO and co-founder Dennis Crowley and COO Evan Cohen said the company would use the funds to continue to grow sales and engineering and expand further internationally.
“I think this round validates what I have been saying for a while — that these new passive awareness technologies are pointing to how we are going to take this company to a new level,” said Crowley, who noted that Foursquare now offers marketers six monetization options, up from two a year ago. “The steps we have taken over the last year have made us able to show investors the opportunities we have with the product.”
Added Cohen: “I think we are really delivering on the promises we made with the recommendations service and we had a better case when after we were able to get it out there for everyone to see.”
The raise, they said, is a relief after a tough year in the media spotlight and, they assert, proves that a lot of work the company has done around revenue growth — it has launched four monetization tools in 2013 — and product innovation has paid off.
That includes its Ads for Small Business product that it is deploying in over 80 countries and its real-time recommendations feature.
That has rolled out this year, described by Peter Kafka as the “most significant product rollout: A new version of the app that will automatically offer users tips about places they’re visiting, without requiring them to check in with the app itself.” That debut, though, came on the heels of the departure of its longtime product head Alex Rainert.
As Kafka also noted: “It’s a crucial bet for the company, which is fighting perceptions that it missed its shot to sell out to Yahoo or Apple, and that it will struggle to survive on its own.”
The new funds come eight months after Foursquare raised $41 million in debt financing.
“We had to not been able to demo what we were talking about until it was out there,” said Crowley about the ability to close funding now. “But once it was in place, it was easier to see where we are going.”
Crowley said the company now has 45 million registered users for the Foursquare app, although it unfortunately — and, really, purposefully — declines to give out its monthly active users stats. It should as it would be a useful and informative indicator of consumer success. Still, it is a nice jump from 33 million earlier this year.
Moving along, he also said Foursquare is also aiming to monetize its growing international user base in places like Turkey, Russia and Brazil via deals with a variety of resellers.
Cohen said some of the new funds will be directed at expanding its staff in those places. While Foursquare has a small office in London, most of the 170-person company is currently located in New York and San Francisco.
“We think mobile technology and user engagement have caught up to Dennis and the Foursquare team’s vision,” said DFJ’s Schuler. “Highly-targeted geo delivery of useful content and promotions will be a huge part of the next phase of the Internet’s evolution and Foursquare is the leader.”
In his blog post, Crowley crowed a bit too, perhaps in relief.
“This investment means that we can build our vision even faster,” he wrote. “And that you guys are going to see a lot more from our team.”