Let’s get the facts straight here: Foursquare doesn’t have to have a business model, it has “only” 1.5 million users in a market that appears to be a more niche than mainstream….but it still manages to raise $20-million in venture capital in a round led by Marc Andreessen and Ben Horowitz.

Call me a skeptic but I don’t get it. It’s hard enough attempting to justify why Twitter has attracted more than $100 million in venture capital but at least it has 125 million users around the world. Nevertheless, there appears to be widespread enthusiasm for the deal.

The reality is none of this really matters to Silicon Valley, which invests in potential and possibilities even when the rest of us are scratching our heads. This is what makes Silicon Valley, Silicon Valley, and probably why the success rates within venture capital are so low.

Foursquare is another example of how start-ups that gain traction with a free service are so difficult for evaluate financially. Even when they are wildly popular, investors need to take a leap of faith in their continued growth and their ability in getting users or advertisers to start paying for the privilege of the service, its users or features.

Sure, there are a variety of potential business models for Foursquare such as local advertising and mobile commerce but it’s just talk until the money starts flowing in.

Silicon Valley, however, loves sexy stories with buzz in emerging markets – even if it is still unclear about the economics of these markets.

Hats off to Foursquare for raising $20-million but the one stark truth is money can’t buy happiness, and as Twitter has discover, it can’t buy a business model that will validate the venture capital being raised.

As much as it might be difficult to avoid the temptation to invest in Foursquare, particularly for anyone who missed out on Twitter, it’s still a risky investment given it is uncertain whether Foursquare is a novelty or business.