Crowley, who announced the news via the company's blog, wrote that the money will be used to, essentially, continue growing the company beyond the location check-in app it was when it launched in 2009. He wrote:
We’re building tools for local businesses to connect with their customers. We’re making search better, every single day. We’re building that location layer for the internet – the platform that all other companies use to power location in their apps.
In Foursquare's specific situation, it makes even more sense because the company has just released an entirely new iOS version which gets iOS to parity with Android and completes the transition toward social search and curation which we all believe better positions the company in the minds of consumers. Also, the revenue model is in its early stages and will be much more developed in the next year. In situations where a valuation inflection point is on the horizon, convertible debt can be an excellent structure for everyone involved. And that is very much the case here.
The debt offering tops several months of headlines about the company.
In March, Foursquare updated its search function Explore to include recommendations and ratings. With these changes, Foursquare positioned itself in more direct competition with Yelp.
At this year's South by Southwest conference in Austin, Texas, Crowley admitted that the biggest mistake the company had made "in terms of product, [was] not putting search front and center from the beginning.”
But he later reiterated that he is determined on moving the company forward. "One of the great things about the position that we are in is that … we do social location. We are doing social maps. And it's the only thing we do, so we can really stand out among the crowd that's trying to do that stuff among hundred other things that they're also trying to do. It puts us in a really nice spot," Crowley told Techcrunch.
This week, as Wilson mentioned, the company released a new iOS system that brings Explore front and center as soon as the users open up the app.
JANA KASPERKEVIC is a graduate of Baruch College, City University of New York, where she earned a bachelors degree in Journalism and Political Science. She covers start-ups, small businesses, and entrepreneurship for Inc. Her work has appeared in The Village Voice, InvestmentNews, Business Insider, and Houston Chronicle, among others. She lives in Brooklyn. @kasperka