Finances

The Meet Group has acquired Growlr, a free dating platform for the gay bear community. Growlr joins MeetMe, Lovoo, Skout and Tagged in The Meet Group’s portfolio of mobile social entertainment apps, a move that marks the parent company’s first foray into the LGBTQ market.

The Meet Group acquired Growlr for $11.8 million using a combination of $4.8 million in cash and $7 million from its existing line of credit. The company pledged an additional $2 million to be paid in annual $1 million installments over the next years if certain revenue metrics are achieved. Geoff Cook, Chief Executive Officer of The Meet Group who co-founded the company as MyYearbook.com in 2005, called the deal “a meaningful step into the large same-sex dating market.”

The dating industry remains a firm favorite for entrepreneurs who dream of founding the next breakout startup. But for many big-time investors, new dating platforms are risky ventures in a crowded market that may not be worth betting on. In honor of Valentine’s Day, Crunchbase News took a look at the relationship between startups, investors and the pursuit of finding a mate. Their status? It’s complicated.

Online dating has proved it can be an enormously profitable industry, yet despite producing impressive numbers, it often struggles to lure venture funding. “In 2018,” writes Joanna Glasner, “venture investors put $127 million globally into 27 startups categorized by Crunchbase as dating-focused. While that’s not chump change, it’s certainly tiny compared to the more than $300 billion in global venture investment across all sectors last year.”

Global venture investment in dating startups currently leans heavily toward companies based in China. Blued, a China-based dating app for gay men, received nearly 80 percent of dating-related capital in 2018. In 2017, Chinese mobile dating app Tantan received the bulk of dating investment. In 2014, Beijing-based matchmaking site Baihe raised a staggering $250 million.

Match Group announced that it has fully acquired dating app Hinge, owning 100 percent of the company along with other high-profile brands like Tinder and OkCupid. This news comes on the heels of Match Group’s announcement that it exceeded revenue expectations in the last quarter of 2018, causing its stock to rise.

Previously, Match Group stock had been downgraded from hold to buy by Deutsch Bank analysts. But with the earnings report, its stock climbed more than 5 percent.

Part of the appeal of Match Group to investors is that it has acquired a host of popular dating apps, including Hinge. The app has been through a rebrand over the last year, focusing on attracting more serious daters.

Brian Norgard, who has reigned as Tinder’s chief of product the past two years, announced his resignation.

According to website Tech Crunch, Norgard says he is exiting on a positive note and plans to get back to his entrepreneurial roots. Before he joined Tinder, he founded startup messaging app Tappy, which was acquired in 2014, along with Facebook messaging app Chill, another successful startup with 30 million users. When Norgard first joined Tinder, he was head of revenue and moved on to his chief of product role.

Norgard cites Keith Rabois of PayPal as his inspiration for leaving to pursue something new.

“It’s been a great ride but my strength has always been in the early-stage game,” Norgard told TechCrunch. “What I’m trying to do now is take all the learnings from that wonderful experience and bring them into my investing.”

Bumble continues to dominate dating industry headlines. In recent months, the company continued its high-profile legal battle with Match Group, debuted in India with the help of actress Priyanka Chopra, launched a fund to invest in women-founded companies, and announced an upcoming line of beauty products. Bumble also revealed that it is exploring an IPO, a rare move in the dating space.

“Our revenue is remarkable, and it is only going to get better,” Bumble founder Whitney Wolfe Herd told Forbes in September. “There is a need for a new IPO in this space, and we offer something that nobody else offers. This would allow us to really spread our wings at a new level.”

Plans for the IPO appear to be moving forward. Andrey Andreev, the majority shareholder of Bumble’s parent company, publicly discussed a possible Nasdaq listing with Bloomberg in October. “We’re now in very deep discussions with banks,” including JPMorgan Chase & Co., he said. “The listing would be on the Nasdaq. It’s been in the air for ages, but the serious consideration has happened only recently -- in the past month.”

Match Group stock fell 10% 2 weeks ago in response to falling short of analysts’ Q4 goals, which were released along with their third quarter earnings reports.

Match Group reported revenue of $444 million, topping analyst estimates of $437 million for quarter 3. This is an increase of 29% when compared to quarter 3 of 2017 ($343 million). Match said it expects revenue of $1.72 billion for the year. But despite the growth and positive news, it was the projections for the last quarter which caused the dip in confidence from Wall Street. Analysts projected $454.5 million in Q4, while Match Group estimates it will only reach between $440 and $450 million.

Match Group lowered its estimates because of its higher-than-anticipated spending for Tinder and its other dating apps. Marketing costs are expected to rise 20% for Tinder and other brands like Hinge.