Foursquare Prepares To Launch Next Funding Round — Will Valuation Top $1 Billion?

Dennis Crowley Foursquare

[credit provider=”Dan Frommer, Business Insider”]

Foursquare just wrapped up the biggest product launch in its history.Up next, likely starting soon: A third financing round that could potentially value the mobile/social company at $1 billion or more.

After launching Foursquare 3.0 two weeks ago, Foursquare held an all-staff brainstorm session today at its NYC headquarters. There was an amazing looking lunch catered by chef Sarah Simmons. And they even got some work done! “We filled up 15 sheets with Q2 ideas,” CEO Dennis Crowley tweeted.

After those plans are firmed up, look for Crowley to kick into fundraising mode.

With positive reviews of Foursquare’s new app, and a good growth story to tell — 7.5 million users, up from 500,000 a year ago — Crowley could potentially field funding or acquisition offers nearing or topping $1 billion.

Why raise money now? Because it can (and that’s the first rule of fund-raising: Raise money when you can, not when you have to). And because it will eventually have to.

The company raised $15 million last spring from Andreessen Horowitz, with founders taking home another $5 million. That’s a nice war-chest for a small company, but it won’t last forever. Foursquare recently released a new self-serve tool for merchants to offer deals, but it’s not currently generating any revenue from that. Also, it’s probably time to step on the spending gas.

Eventually, if Foursquare is going to print money the way Groupon has, it’s probably going to need a sales team. That, combined with the company’s need for engineering resources, is going to require more money. And raising it could keep Crowley busy for a while.

He will have plenty of options.

Top VC firms, eager to invest in one of the big-and-growing social companies, could write big checks at big valuations. It wouldn’t surprise us to see Foursquare raise anywhere from $50 million to $200 million at a valuation ranging from $500 million to $1 billion or more.

Union Square Ventures, which led Foursquare’s $1.35 million Series A in 2009, could double down via its new “opportunity fund,” which exists in part to allow the company to “continue to invest in our most established and successful companies.”

Kleiner Perkins, which recently wrote big checks to Twitter and Groupon, could be a potential investor. So could any of the Valley’s big firms, really.

And during the fundraising process, Crowley could easily run into some acquisition offers, too. Recall that last year, while he was raising money, Crowley also talked to Yahoo and Facebook about potential deals.

Google is one potential acquirer. We’ve heard rumours that Google cofounder Larry Page, returning soon to his old post as CEO, is considering buying a social network.

Google has still not been able to figure out “social,” and Foursquare is a social product that works. Better yet, it’s already mobile, so Google wouldn’t have to figure out how to tailor it for phones. Plus, a big enough check — maybe $1 billion or more — could rid Crowley of the bad memories from working at Google the last time it bought his startup, Dodgeball, and eventually closed it down.

Groupon is another potentially good partner for Foursquare. The Chicago-based local deals company — which itself turned down a multi-billion dollar offer from Google last year — is launching a new mobile product early next month. If it isn’t immediately successful, Foursquare might be a great mobile front-end for Groupon’s commerce back-end.

A Groupon-Foursquare combo would probably involve a lot of stock, and not a lot of cash, but Crowley and Groupon CEO Andrew Mason might work well together. It’s a possibility, at least.

No matter what, Foursquare will probably end up with a high-end partner and a nice valuation.

Don’t Miss: Here’s What Foursquare HQ Looked Like Right Before The Biggest Launch In Company History (PHOTO TOUR)