This is a republished opinion piece by Venntro CEO Ross Williams, originally posted on Medium.
On Friday 25th March 2016, Steve O’Hear broke the news that Bumble is nearly 80% owned by Badoo and therefore allegedly controlled by the incredibly successful, powerful and secretive Russian entrepreneur Andrey Andreev.
As the article says:
A recent company filing for Bumble Holding Limited – the U.K.-registered entity behind Bumble – shows the exact equity breakdown of the company. Most strikingly, Badoo has a whopping 79 per cent stake in Bumble, making it by far the majority owner. And, as you’d then expect, in second place is Bumble founder Wolfe with an ownership stake of 20 per cent. Fellow ex-Tinder employees, Mick and Gulczynski, make up the remaining 1 per cent.
This in no way detracts from the phenomenal achievement of Wolfe and the team responsible for building Bumble. The role of shareholders and executives are very different, but often overlap in startup world, and it’s good to see this shareholding clarified.
None of which should take away from Wolfe and her team at Bumble’s success to date. The app boasts 3.5 million users since launching just shy of 15 months ago. It’s also been steadfast in its female-led approach, an underserved portion of the market. In Bumble, women are required to make the first move, and I’m told have done so over 36 million times via the app – a number that suggests Wolfe’s vision for a new type of dating app is actually working.
So why does this matter?
It matters because startup success stories inform young entrepreneurs – they are the modern fairy tales that set expectations for startups – and it’s important that realistic expectations are set.
The Bumble PR machine have done a fantastic job of using female-focussed media titles to reinforce the image of Wolfe as the Lone Wolf, the woman behind the dating app that puts women in control.
A good example is the Vogue magazine article “What’s the Buzz about Bumble?” which carries an interview with Wolfe – along with a lot of photographs of the founder from a photoshoot.
Wolfe and her team have done an amazing job building Bumble and have been able to focus on the execution of their product in part because funding is taken care of and they don’t need to worry about fundraising.
Setting realistic expectations
Dating startups are notoriously difficult to grow and scale and corporate venture capital is, I believe, the most effective way to achieve commercial success in an online dating business.
Badoo investing in Bumble is an example of corporate venture capital.
As well as cash, corporate venturing brings knowledge and assets – which in the case of online dating, often means a massive database which can help scale a startup phenomenally quickly (at the time of writing, Badoo has over 304m registered users worldwide to leverage to grow their other products).
Less than six months ago, we launched Venntro Ventures – also featured on TechCrunch – and received dozens of inbound enquiries from dating startups around the world who were interested in growing their dating business.
We are in discussions with a number of these (and will be making some announcements soon), but we declined to invest in the majority of the opportunities because of unrealistic equity expectations from the founders. These founders balked at the idea of giving up to half their equity in return for access to our cash, experience and resources.
As Bumble shows, corporate venturing can be an extremely effective way of reaching scale and achieving success – but in their case, the founders gave away almost 80% of their equity to achieve this.
Of course, it is still possible to raise external investments for dating startups – for me, the most impressive female in online dating is Robyn Exton, the founder of Her (formerly Dattch), the lesbian app for queer, bisexual and gay women. Robyn went the traditional route, raising $1.87m in four rounds from nine investors according to Crunchbase – and as anyone who has met her will know, Robyn is passionate about her product, her team and her mission – and I’ve no doubt she will be extremely successful in her market.
I suspect that Bumble will achieve greater success in the next 12 months – though it’s going to be interesting to see whether they can maintain medium and long term success in a market which is notoriously fickle. Their challenge will be to maintain growth when they are no longer the new kid on the block and are challenged by the next dating startup.
Their chances of success are certainly improved by being part of a portfolio of dating products – perhaps Andrey is building the next Match Group?