April 23 (Bloomberg) -- Foursquare Labs Inc., the location-based Web service that reached 1 million users this week, will decide whether to sell itself or raise more venture capital within weeks, Chief Executive Officer Dennis Crowley said.
The New York-based startup is debating the right way to finance its growth, Crowley, 33, said in an interview today. He declined to identify any suitors or comment on how much the company might be worth.
“We’ll do whatever is best for the product,” Crowley said. “We’ll have it resolved in a couple of weeks. I want to end the distractions and get back to work.”
Foursquare, which has grown from 170,000 users at the end of last year, would help an acquirer expand in the wireless local-advertising market. Services like Foursquare, which deliver coupons and offers to users based on where their phones say they are, may account for as much as $4.1 billion in yearly advertising spending by 2015, said Kip Cassino, research director at consulting firm Borrell Associates in Williamsburg, Virginia.
Yahoo! Inc. was considering buying Foursquare for about $100 million, Business Insider reported this month. The Silicon Valley blog TechCrunch reported yesterday that Microsoft Corp. and Facebook Inc. are or have been in talks with the company.
Foursquare has also held talks with several venture-capital firms, TechCrunch reported March 25. Proposed valuations ranged as high as $80 million, the blog reported.
Dana Lengkeek, a spokeswoman for Yahoo, and Jonathan Thaw, a spokesman for Facebook, said their companies don’t comment on rumor or speculation. Frank Shaw, a spokesman for Microsoft, also declined to comment.
Crowley said many of the reports aren’t accurate, and that Foursquare hadn’t been a source for them.
“People are just making stuff up at this point,” he said today. “We’re just as surprised as anyone else.”
Foursquare, founded last year, lets users “check in” using mobile phones when they visit a specific place or business, earning rewards and letting advertisers target them for special offers. Users can also see who else has checked in at locations near them, review businesses and get suggestions on things to do near where they are.
The 20-employee company offers free advertising, for now, to small shops and restaurants, while generating revenue from selling ads to chain businesses, Crowley said. Ultimately, it plans to offer targeted advertising for local businesses, by crunching data about where users check in to guess what kinds of offers they want to see, he said.
The company is rolling out new features, including a self-service platform to let small businesses create Foursquare ads, and may begin services to introduce users to each other, Crowley said. The number of users is growing 50 percent a month and is on pace to reach 3 million by the end of the summer, he said.
“I’m like, ‘That’s impossible,’ and Harry’s like, ‘That’s the curve, dude,’” Crowley said, referring to Foursquare lead engineer Harry Heymann. “When you get to a million people you can start introducing people to other people. You can do a lot of interesting things.”
To contact the reporter on this story: Tim Mullaney in New York at firstname.lastname@example.org