Raised over $112M to date. Talk about a cash sinkhole.
I've been a user since the Dodgeball days, and I personally wouldn't invest in them at this point. But I don't think it's a crazy gamble.
Facebook took $2.24 billion in investment before going public. Twitter took $1.16 billion. Free-to-use network-effect businesses are expensive to build, because you need to build a mainstream-quality product and keep it running quite a while before you can monetize. Indeed, it's best to wait as long as possible before monetizing.
(ii) Facebook and Twitter raised so much capital later on to support real user/activity growth, the primary use of proceeds was not fund their ongoing burn rate. The $41m raised by FourSquare is going to finance current operations/burn rate, not growth.
http://www.prnewswire.com/news-releases-test/facebook-raises...
Regarding point ii, what expenses do you see as under each category? I'm not denying the difference; I'm just not clear what you think is being done differently with the money.