The mobile location app developer Foursquare has raised $41 million in debts to fund its growth. The company plans to deploy the cash to expand into a robust recommendation tool, reports Bloomberg Businessweek.

Startups usually don’t go for debts, but Foursquare’s move shows thats how difficult financing has become for tech startups after the Facebook Inc (NASDAQ:FB)’s much hyped initial public offering.

foursquare logo

Foursquare tried to raise capital for months, but it couldn’t convince investors that the company is really worth $760 million, a figure estimated by Spark Capital when it acquired stock from Foursquare employees in early 2012, people familiar with the matter told the Wall Street Journal at the time.

The $41 million debt includes a multi-year loan from Silver Lake and some convertible debt from other existing investors Spark Capital, Union Square Ventures, O’Reilly AlphaTech Ventures and Andreessen Horowitz. By going for debts, the company avoided being given a valuation by investors.

According to Union Square partner Fred Wilson, valuation isn’t really important for existing investors as their stake in the company wouldn’t change much. Foursquare CEO Dennis Crowley disclosed the news of funding in a blog post.

Foursquare gives users location-based recommendations on bars, restaurants, food and other activities. Friends can see the user’s check-in and follow them. The app was a darling of social media due to the rising popularity of its check-in feature. But check-ins now have become widely available, including on Facebook Inc (NASDAQ:FB). So, the company is struggling to revive itself as a commerce and local search tool.

Potential investors have become increasingly concerned as the growth of  the number of users of its free service began to slow. Its revenues were also very low, about $2 million last year. That came from selling targeted coupons.

However, Mr. Dennis Crowley assured that the company has a lot of things to do. He said Foursquare is working on tools that will help businesses connect with their customers.