Foursquare has taken one more step toward silencing its critics. After more than a year of harsh criticism from the press, competitors, and PrivCo, a research firm that said it would go out of business, the startup confirmed today that it has raised $35 million in Series D funding, breathing new life into the location-based service. "With non-apologies to the doomsday predictions of PrivCo and others, Foursquare is VERY much alive and well," tweeted Foursquare spokesperson Brendan Lewis.
The raise, first reported by AllThingsD, helps to alter the tough narrative that has long engulfed the company. Though the company raised a large round of convertible debt last year, the sense was that it would have trouble raising another round, let alone at a higher valuation. Critics had grown increasingly skeptical of its user growth and its potential to monetize. But with a "fresh $35 [million] in the bank," as CEO Dennis Crowley said today, along with several new ad products and 45 million users, the narrative has shifted toward Foursquare bouncing back.
The new round of capital, which was led by DFJ Growth and the Capital Group, will give Foursquare time to ramp up its ad products. The startup has been exploring new ways to generate revenue, including pushing advertising to its users after they check in at restaurants and bars. Foursquare has also been experimenting with passive notifications, mining its 5 billion check-ins and 40 million tips to deliver helpful information to users without them having to open the app. If you're at a nearby coffee shop, for example, Foursquare is getting smart enough to figure out where you are, and can deliver a tip from your friend to, say, try the espresso—potentially another avenue for targeted ads.
It wasn't that long ago that many assumed the company was done for. "The thing I fear, which would be devastating for the industry, let alone Dennis, is that he gets rushed and Foursquare can't monetize, they can't raise [another round], and they have to sell to Facebook or Google or whoever," Anil Dash told me for our recent Fast Company profile of Crowley.
Crowley called it Foursquare's "hazing period," part of the negative curve of the hype cycle that every startup experiences. As Nathan Folkman, Foursquare employee No. 4 and now the CTO of Path, put it, "It's inevitable with such high expectations that everyone will turn on you.... People are in love with you, but then all of a sudden, they can't wait to watch you fail."
But Foursquare has been working to escape that narrative. Its ad products are beginning to generate revenue. And the startup recently introduced a sleek redesign of its iOS app, which boosted usage by 60%.
That seems to be enough for investors. According to AllThingsD, the company's valuation has gone up slightly (though not significantly) from its last valuation of $600 million.
The question now is whether Crowley can finally build Foursquare into a sustainable business—and a product worthy of its initial hype.
Check out our recent profile of Crowley from our September issue.