IAC stakes bigger claim over dating app Tinder
Three's a crowd. InterActiveCorp has reportedly paid millions to remove a former partner from Tinder's picture.
Swipe right for love? InterActiveCorp seems to think so.
The media conglomerate, which owns a variety of entertainment and dating properties including Match.com, has assumed even more control over Tinder, the hit mobile dating app in which it was already the largest shareholder, according to Bloomberg. IAC has bought an additional 10 percent stake in the Los Angeles-based company from venture capitalist Chamath Palihapitya.
Exact terms of the arrangement are unclear. Bloomberg reported that IAC paid $500 million in a transaction that values the swipe-right-to-like app at $5 billion, while Business Insider suggested the terms where much humbler: $50 million at a $500 million valuation. Palihapitya tweeted that Bloomberg's reported terms were inaccurate. Tinder declined to comment.
"I can confirm on the record that we did a transaction with Chamath [Palihapitiya], but [the $5 billion] valuation is nowhere near the truth," Sam Yagan, CEO of IAC's Match Group, told Forbes.
Tinder, a 19-month-old app, launched out of IAC's Hatch Labs, a defunct incubator that was a joint venture of IAC and mobile development firm Xtreme Labs, whose majority stakeholder is Palihapitiya. IAC paid to take over Xtreme Lab's stake in Tinder, Bloomberg reported.
Since its launch, Tinder has quickly become a dating essential for college-aged kids and young adults, and Bloomberg says its has 10 million daily users, though Tinder has never publicly discussed the size of its audience.
On Tinder, people swipe through daters' succinct profiles -- right to like, left to ignore. When two people indicate they like each other, a match is made and the parties can start conversing in the mobile app. By December of 2013, Tinder had sparked 500 million matches, and, as of a few weeks ago, the app had arranged at least 1,000 engagements or marriages, a spokesperson told CNET.
Tinder is already a subsidiary of IAC, though co-founders Sean Rad and Justin Mateen prefer to talk about IAC as merely an investor and their insanely popular app as an independent startup. And though IAC clearly values its hot property, there's still a large question mark around how the free application, which is surely siphoning singles off from competitors, will make money.
Meanwhile IAC's less trendy properties Match.com and OKCupid generate a substantial amount of money. The company's pool of dating services brought in $203.9 million in revenue during the fourth quarter of 2013. IAC, which is trading around $68 a share, has a market capitalization of $5.62 billion.