The initial piece TechCrunch ran on Foursquare co-founders $4 million windfall put Dennis Crowley and Naveen Selvadurai in a not-so-flattering light, considering that payout was 32 percent of the startup’s recent $20 million Series B funding round raised from Andreesen Horowitz, Union Square and O’Reilly AlphaTech. We later found out that the $4 million founder split was from the shares Crowley and Selvadurai sold, to bring more investment opportunities around Foursquare.

As if you weren’t already expecting more money to be thrown into Foursquare, here the founders are, laying it out on the table for investors. Crowley should know how it works–his other location-based startup Dodgeball was acquired (and deadpooled) by Google. Not only was Dodgeball ahead of its time, it gave Crowley the opportunity to catch the second wave with Foursquare.

Location-based anything = red hot

The location-based mobile app industry has really started to heat up in the past six months, garnering larger and larger investments. Shopkick raised $15 million for its shopping alerts tool, while other location-based startups have attracted millions of users between them, from Gowalla to Loopt. The holdout for mobile technology and consumer options to catch up to the concepts around location-based services has been a fruitful one, with social gaming and incentive rewards being central to their current success.

Twitter, Facebook, Google validate the trend

The trend is further validated by larger companies, such as Twitter and Facebook. Both social networks are layering in location-aware features that do more than just note your coordinates, with Twitter using new features like @earlybird to get a head start. Google Latitude is yet another example of the big boys wanting to get in on the trend’s upswing.

The more fun consumers have with these games, the more integrated opportunities there are for advertising. some very recognizable brands spanning the food and fashion industries have been early to the party, in turn helping location-based start-ups to attract and engage users.

Still room to grow

As red-hot as location-based services are getting, sites like Foursquare still have lots of room to grow and develop. The flood of investor interest will really flesh out the practicalities around implementing a business model around consumer location, meaning it may still be some time before brands reap the full rewards of participating in what is still relatively experimental.

At the MobileBeat 2010 IAC Mobile senior vice president Dinesh Moorjani outlined the brand vs. consumer rewards for services like Foursquare. The bottom line is that location-based services need brands more than brands need them. This suggests that location-based services should be thinking of more ways to connect brands and consumers beyond check-ins, determining wherein lie their best opportunities for monetizing shared consumer activity. Prior to smartphones and services like Foursquare, this often meant appealing largely to brand marketers, but now it means creating useful tools for both brands and customers.