Union Square Ventures partner Fred Wilson has written a blog post about the somewhat convoluted path that led to the recent closing of a Series B financing round for Foursquare, in which USV has an investment. It was smart of Foursquare to take its time and think about the right path, he argues, as opposed to jumping into a financing or a takeover offer right away. But the VC also said something that has implications for Foursquare’s future growth, in particular its relationship with Facebook, which was rumored to be in talks to acquire the company.
Wilson says that the discussions Foursquare’s founders had with potential acquirers helped the company understand the risks of going it alone vs. those of selling the company outright (which founder Dennis Crowley did with his previous company, Dodgeball, to Google). The Union Square VC adds that discussions with potential acquirers also:
…allowed the founders to develop close working relationships with some of the most important Internet companies who can not only be acquirers but also distribution partners and monetization partners.
Without reading too much into that statement, it sounds like Wilson is saying Foursquare will be counting on Facebook (and possibly Yahoo and Microsoft, which were also rumored to be looking at an acquisition of the company) to be partners rather than competitors in the location-based services game — in particular, distribution and monetization partners. This adds some fuel to the theory that Facebook will use its social networking clout to become an aggregator of location-based services such as Foursquare and Gowalla, rather than launching its own competing service or trying to acquire one.
There was much speculation leading up to the F8 conference in April that Facebook would launch its own location services, including a piece in the New York Times that quoted sources close to the company. But nothing along those lines was unveiled at the conference, or even discussed (although there have been reports that Facebook has been experimenting with location features for advertisers like McDonald’s (d mcd)). While many observers have assumed that Facebook would inevitably crush Foursquare and Gowalla with its own location offering, Wilson’s post suggests that it’s far more likely the giant social network will wind up working with them rather than against them.
In any case, as Om noted, now that it’s closed its financing round Foursquare has to make the transition from being the cool new social service to being an actual operating company, with all that entails.
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