mobile networking service Foursquare has raised $20 million in venture capitalRed-hot mobile networking service Foursquare announced Tuesday that it has raised $20 million in venture capital, bringing the company's valuation to a cool $95 million.

Investors in the B round include existing Foursquare funders Union Square Ventures and O'Reilly AlphaTech Ventures, along with a new partner, Andreessen Horowitz, the VC firm of Marc Andreessen, the legendary co-founder of Netscape.

27 Employees, 1.8 Million Users

Foursquare, which lets users broadcast their locations and see what their friends are up to, now has 1.8 million users. In a blog post, company chieftain Dennis Crowley said the startup has gone from 2 employees to 27 in one year.

"With this new round of financing, our main priority will be to expand our organization to supplement the amazing core team we've assembled already," Crowley wrote. "We're hoping to build a world-class engineering organization, based primarily in our headquarters in the New York City to help us develop the next generation of mobile + social + local products that will excite our users and provide unique value for local merchants."

In a blog post, Horowitz said he and Andreessen had invested in the company because of the promise of location-based services. He pointed out that Foursquare -- which is adding 15,000 new users a day -- is growing faster than Twitter was at this stage. Users check in at venues in exchange for prizes and discounts.

Now A Potential Moneymaker

Foursquare started out as a nifty way to keep track of friends. But over the last year, the service has evolved into a potential moneymaker. Proprietors of stores, restaurants and other retailers have shown understandable interest in learning who their most frequent customers are, and providing incentives for repeat business.

The company has struck deals with companies like Starbucks (SBUX) and Zagat's. The new round of funding should put to rest -- for the moment anyway -- the acquisition talk that has swirled around the company after it reportedly turned down $125 million from Yahoo! (YHOO) earlier this year.

Despite the buzz, Foursquare does face competitors, notably Gowalla, a similar service, and Yelp, which recently incorporated check-in badges of its own.

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