In prior funding rounds, Foursquare has been financed via equity. In other words, investors put in money in exchange for a chunk of the company, the sort of transaction that puts an total value on the company. Foursquare’s valuation spiraled steadily upward for its first three rounds, reportedly hitting $95 million and then $600 million.
With convertible debt, the lender’s loan converts at some future date to equity, though it retains the option of being paid back in cash (which usually doesn’t happen). That means you can’t really ascribe a valuation to a company during a convertible debt round, which is probably why the round was attractive to Foursquare.