When veteran blogger and venture capitalist Fred Wilson addresses an audience on the business opportunities in geolocational services, you can't help but listen. While we have our own opinions as to why users have gone geoloco this year, Wilson explained his perspective from an investment standpoint at today's Geoloco conference.

With Union Square Venture investments in both FourSquare and Twitter, Wilson has literally put his money where his mouth is. In mid July 2009, Wilson gushed about the Foursquare experience, and by early September news leaked that the company would be working with his firm for an additional round of financing. As Foursquare matures, Wilson admits that location-based services still have one major weakness - and it's not revenue generation, it's privacy.

Fred Wilson at the NYU Journalism Institute last month.

Wilson suggests that while large companies like Twitter, Facebook, Google and Yahoo could set a precedence for privacy, from an infrastructural outlook it is harder for them to roll back and scale permissions to their huge social graphs.

He says, "The challenge for large social networks is to undo permissions that they've already given. Meanwhile, a startup is at an advantage as they can build something from scratch that allows the user to predefine the data terms for sharing."

Our own Marshall Kirkpatrick has criticized a number of Facebook's privacy policy decisions, and Wilson echos this need for user education and control.

"When you reveal your specific location, it's very important that you have control over that... There are business opportunities in privacy-related services," Wilson says. "The challenge is to get someone [whether business or consumer] to pay $2-$10 dollars per month to ensure that sort of premium privacy."

For more insights from Wilson check out his blog at avc.com.

Photo by Andrew Mager