Foursquare has been trying to turn itself into a real business over the past few months with a number of product launches and key new hires.

For the first time ever, it's building out an ad-sales team under a new VP of sales from Yahoo, Rob Wilk. It has also hired a chief revenue officer, Steven Rosenblatt.

But the hunt for new funding isn't going quite as easily as it did in 2011, when Foursquare raised $50 million at a $600 million valuation.

Both TechCrunch and The Wall Street Journal say Foursquare is hunting for a fresh new round in the $700-800 million valuation range. But investors aren't biting.

Shortly before Facebook's IPO spooked late-stage investors, Spark Capital purchased $30 million worth of Foursquare stock. (From what we understand, a good chunk of that stock most likely came from Naveen Selvadurai, Foursquare's departed cofounder.)

The Wall Street Journal's Spencer Ante says the private purchase valued Foursquare at $760 million. But now the company is struggling to raise an additional $50 million, in part because its growth has slowed, but also because its business model isn't yet proven.



Out of 25 million registered users, only 8 million use the app monthly. Usage of Foursquare's Explore feature, which recommends local places to Foursquare users, has also slowed. Jon Steinback, a Foursquare vice president, conceded to the WSJ that the company's growth rate has stalled, but he also said Foursquare will sign up more users in 2012 than in any year prior.

What may have investors the most spooked is the lack of revenue Foursquare is generating. Unfortunately for Dennis Crowley, his company is still viewed by many as a social media platform, not a data company. So Foursquare is (maybe unfairly) being compared to Twitter and Facebook's businesses.

Ante notes that while Facebook was generating $153 million in its fourth year and Twitter $43 million, Foursquare is only pulling in about $2 million at the same age.

It's important to note that Foursquare hasn't tried until recently to really generate revenue. The $2 million sounds like it has largely been generated by a feature Foursquare launched over the summer called Promoted Updates.

But if Crowley wants to continue independently operating Foursquare, he's going to need to step on the gas. Because while investors may make exceptions for companies that either have a lot of revenue or a lot of growth, it's hard to justify spending money on a company that has neither.