I'm not sure Facebook's investors would be happy with $400MM in pre-IPO shares, except in the unlikely event the service is generating significant revenue per user or bigger than all their location-based competitors before Facebook IPOs. I believe that's double Y Combinator's biggest exit, so it's not as if you can't pick up great hackers with great products and actual revenues for a lot less, and with pre-profit location-based startups being not-exactly-unfashionable at the moment Facebook are spoilt for choice if they want to make strategic acquisitions in that space.

I think Color have committed themselves to trying to build something big enough to be considered a Facebook alternative. Taking $41 million in a Series A buys you a lot of premature optimisation or a lot of runway if you don't think you're going to get a better valuation in a series B round. It also more or less rules out the quick exit.