Spark Networks has just announced a massive new partnership with investment firm PEAK6, as the dating company’s executive team is overhauled.
PEAK6 has spent $7.8m on 5m shares of Spark Networks at $1.55, meaning the Chicago firm now owns 16% of the company’s outstanding shares.
And with the move, PEAK6 is bringing in its own team to take over the positions of CEO, CTO and CRO.
Michael Egan, the former CEO of Spark Networks, is being replaced by Danny Rosenthal, with PEAK6 Chief Architect David Budworth becoming CTO and PEAK6’s Lisa McLafferty taking the role of CRO.
In addition to this, the president of PEAK6, Brad Goldberg, is joining Spark’s board, along with new CEO Danny Rosenthal.
Speaking about the partnership, board member John H. Lewis said: “PEAK6 is bringing a comprehensive and transformative package to Spark Networks that includes access to significant operational resources and a new leadership team with an outstanding track record of success with both large, established brands like Microsoft, Orbitz, and FTD.com, and smaller entrepreneurial success stories like OptionsHouse.”
And the move also brings “strength” to Spark’s balance sheet, Lewis said, with its Q2 2016 net cash position increasing from $3.1m to $10.9m.
In addition to buying 16% of Spark’s shares, the dating brand has also given PEAK6 warrant to purchase 7.5m shares at $1.74 per share – 50% of which can be bought if Spark’s share price reaches $2.50, and the remaining 50% if the price hits $3.50.
The investment comes at a time when Spark has continued to perform poorly, with revenue for Q2 falling 8% from the previous quarter to $9.1m – a drop of 26% compared to a year ago.
As with previous quarters, this was driven by a decrease in average paying subscribers, which fell from 199,451 to 189,938 over the course of the quarter.
And after under two years at the company, Michael Egan is now leaving the LA-based dating business, having taken over from Greg Liberman as CEO after a board takeover by active investor Osmium in 2014.
Spark Networks Chairman Michael McConnell said the board “greatly appreciates Michael Egan’s efforts over the last 18 months to stabilize the core subscriber base at a profitable level while substantially enhancing the brands in communities that Spark serves.
“PEAK6 is bringing significant talent, resources and capital to Spark as we continue to work to drive shareholder value.”
New Spark CEO Danny Rosenthal has been a partner at PEAK6 since 1999, assuming roles including CTO, as well as serving as the CEO & founder of OptionsHouse.com and the CEO of Apex Clearing Corp.
Despite promising a “crawl, walk, run strategy” back in 2015 after a disastrous 2014, former CEO Michael Egan and Spark were unable to resuscitate the dating company, with both its Christian and Jewish networks haemorrhaging users as revenue continued to fall.
PEAK6 clearly see potential with the company and its flagship brands, but the new executive team certainly have a job on their hands if they want to reinvigorating the company, even with the financial clout they bring with them.
To find out more about the partnership please click here.