Some business models only work at scale. Scale can be users, data, traffic, partnerships, distribution or a variety of things.

This is a bet that Foursquare will find a business model as they become the location service everything builds on, or something else, that only works at scale.

In the scheme of private equity financings, this is a rather small deal and makes perfect sense for Foursquare.

And in fact, buying equipment is one of the worst things to do with cash. If you have the cash, then you should leverage that to finance or lease the equipment. :-)