It makes sense from the investor's perspective. They weren't going to get a better, more lucrative exit. Gowalla would probably just whither and die eventuall

It makes sense from the investor's perspective. They weren't going to get a better, more lucrative exit. Gowalla would probably just whither and die eventually. Instead, now the investors get to talk about how they had a "successful" exit, which might help them get future deals (most startups would prefer to raise money from someone with several exits). It seems like it was the best deal for all involved.