Fast-growing Tinder is helping to make “swipe right” part of the dating lexicon. But it’s venture capitalists who are giving online dating apps their confirmation.
Affiliate publication Venture Capital Journal analyzed the sector and found more than a dozenmobile apps and social sites, dedicated to helping people find a date, that have cropped up in recent years, having collectively raised about $70 million.
A couple of the startups, such as HowAboutWe, have already been scooped up. IAC, which owns Match.com, OkCupid and has a majority stake in Tinder, announced early this summer its plans to acquire the Brooklyn, New York-based dating site, which counts Khosla Ventures, ff Venture Capital, RRE Ventures and Founder Collective as its backers.
Meanwhile, other online dating apps are newly backed or launched, such as New York-based Coffee Meets Bagel, which started in 2012 and has raised just over $3.4 million from Lightbank and others.
Paul Lee, general partner at Lightbank, said he was attracted to the startup’s founding trio of sisters who he said “work well together.” He also liked the fact that Coffee Meets Bagel was “focused on actual quality matches.”
“The notion of online dating is no longer taboo,” said Lee, who noted that the U.S. has more singles than married people.
“Combine that with the proliferation of mobile handsets, and the dating space gets significantly larger,” he said.
The growth in mobile and the increased attention to dating apps come as Tinder, the free, location-based dating app, is gaining more attention for its simple-to-use hook-up features. Earlier this month, Tinder announced plans to launch a premium service in November that will offer paying users more match-making powers.
This week, it was reported that Benchmark Capital has acquired an equity stake in the Los Angeles-based online dating app. As a result of the transaction, Benchmark General Partner Matt Cohler was named to the company’s board of directors.
Josh Breinlinger, venture partner with Sigma West, has not funded a mobile dating app, but he said there “is a huge market for it.”
“Dating is a big fundamental thing that people want to do, and it applies to almost everyone who is single,” he said. “There’s absolutely no question it will completely move to mobile. That’s why VCs and founders are interested. It’s not a new industry, but with mobile, there’s a whole new opportunity.”
Martin Gedalin, founder and managing partner of Lumia Capital, took a chance with Hinge, a matchmaking app that leverages a user’s social network to find matches. The New York-based startup recently attracted $4.5 million from a group that also included Founders Fund, Lowercase Capital, CAA Ventures and previous investors Middleland Capital and Great Oaks Venture Capital.
Hinge, he said, which is optimized for the mobile user, is tapping into a demographic that’s never dated online. More than half of Hinge’s users are new to the online dating world.
Gedalin said he is watching how the markets react to the public debut of Zoosk, which is in registration for an IPO. A strong performance, he said, is a good indicator for other exit prospects in the space.
“In many ways, tapping your social network means that meeting someone on Hinge is not that different from meeting someone at a friend’s get-together,” Gedalin said. “But software and social media allow this to be done on a massive scale.”
This story first appeared in affiliate magazine Venture Capital Journal, which is published by Buyouts Insider. Subscribers can read the full story and an accompanying table of VC-backed online dating startups by clicking here. To subscribe to VCJ, click here for the Marketplace.
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