Dating Startups Have Suddenly Become Screwed

Brian Schechter and Aaron Schildkrout HowAboutWe


HowAboutWe's co-founders.

From Hinge to Grindr to Grouper to JSwipe, there are a lot of dating startups being built. While the sector used to be a popular one for venture capitalists to back, the acquisition landscape has suddenly changed and exit opportunities for many of these companies are now uncertain.

A startup investor tells Business Insider why:

"There's only ever one acquirer in the dating space, and that's IAC," this person said. Barry Diller's company owns OKCupid, and HowAboutWe. It also owns the majority of Tinder, a hot mobile dating solution. IAC recently acquired more Tinder shares in a deal that valued the startup at $500 million, making Tinder a leader in the mobile dating space. Advertisement

"Now that IAC has Tinder, it doesn't have the same appetite for acquisitions that it had a few years ago," the investor explained. "Who's going to buy all of these startups now?" Other large dating properties like eHarmony and Zoosk haven't traditionally been active buyers.

That's not to say IAC isn't making any more acquisitions. This week, IAC bought HowAboutWe, a five-year-old startup that raised more than $20 million. But dating startups don't have the same leverage with IAC they had before.

Although the purchase amount hasn't been announced, the IAC offer seems less-than -ideal for HowAboutWe; an insider told Business Insider that budgetary restraints forced HowAboutWe to lay off a good chunk of its staff in order to join IAC. The New York Times confirmed that some of HowAboutWe's business, its Couples product, wouldn't be joining IAC and some staffers were laid off.

"The online dating business is completely monopolized - IAC owns online dating," HowAboutWe's co-founder Brian Schechter admitted in January.