- Date
- 17 February 2021
By @Matthew U |
The Story
Last Thursday, shortly before the Valentine’s Day weekend, app-based dating business Bumble made its Nasdaq debut. Investors were smitten, driving the company’s market capitalisation to over $13 billion in the first day of trading. Bumble’s eponymous app is unique in that female users must initiate contact with their ‘matches’, an approach founder Whitney Wolfe Herd heralds as modernising “the gender dynamics of dating and romance” (Bumble). Though the company made a loss last year, it managed to increase its share of dating app revenue in the US to 19%, up from 10% in 2017 (Sensor Tower).
Bumble faces stiff competition from rival Match Group, whose main service, Tinder, is the world’s most downloaded dating app (Apptopia). Match Group has spent years “swallowing promising […] brands” such as Hinge, Plenty of Fish, and OkCupid to enhance its portfolio, and has seen its share price swell tenfold since its own Nasdaq listing in 2015 (Bloomberg). In its largest ever acquisition, the group recently agreed to pay $1.73 billion for Hyperconnect, a South Korean start-up. Hyperconnect facilitates video chats with features such as real-time translation and augmented reality avatars, and Match Group is likely to apply this technology to its apps (Nikkei).
In the shadow of giants like Bumble and Match Group, independent matchmaking firms have two options. One is to carve out their own niche. Grindr has become one of the best-known LGBTQ dating apps, and was valued at over $600 million last year. Meanwhile, Muslim dating service Muzmatch has grown its membership to four million, and has raised almost $10 million from venture capital investors. There are even specific apps for single professionals and, somewhat bizarrely, supporters of former US President Donald Trump.
The other option is to innovate. Coffee Meets Bagel suggests personalised ice-breaker questions, while The Intro has dispensed with a chat function altogether and instead focusses on scheduling real-life dates for users who have matched. Ultimately, with an estimated 240 million people using dating apps, and commonly using more than one at a time, the market may well be “large enough to accommodate multiple success stories” (The Economist; Financial Times).
What It Means For Businesses And Law Firms
The principal opportunities for law firms in the online dating sector lie in advising on sizeable M&A and capital markets transactions. Wachtell Lipton Rosen & Katz has won mandates for Match Group in the past, while Grindr has turned to Jones Day. Simpson Thacher & Bartlett, having advised on private equity firm Blackstone’s investment in Bumble back in 2019, led on the company’s IPO.
Regulatory advice will also be required, given that dating apps continue to court controversy. Match Group was investigated by the US Federal Trade Commission two years ago for unfair business practices; the group was accused of emailing non-paying users about romantic messages it knew to be fake in an effort to get them to subscribe. In addition, just last month Grindr was fined $11.7 million by the Norweigan Data Protection Authority for sharing users’ private details with advertising companies; this “not only violated European privacy rights but also could have put users at serious risk in countries […] where consensual same-sex sexual acts are illegal” (New York Times). Love may be blind but state regulators, it would appear, are not.
