Yelp, the popular local review site, will soon announce a new $15 million dollar round of financing led by DAG Ventures. The valuation is rumored to be in the $200 million range. Yelp says that they will be using the money to expand geographically, add onto their sales team, and establish an office in NYC (they are based in San Francisco). This is Yelp’s fourth round of funding since their founding in 2004.
Yelp is also boasting some impressive stats: 8.3 million uniques in the past 30 days and over 2.3 million reviews (with the 1 million mark being reached on May 2007) (these are internal Google Analytics stats that the company shared with us). Yelp is in a competitive space with InsiderPages (acquired by Citysearch), and YellowBot. The real competition, though, will eventually be Google Local and Yahoo Local.
With this latest round, DAG joins previous investors Max Levchin ($1 million, Summer 2004), Bessemer Venture Partners ($5 million, Q4 2005), and Benchmark Capital ($10 million, Q4 2006). The company has now raised a total of $31 million. Revenues are rumored to be sub $10 million/year.
@ Ask Bjorn Hansen:
OK, even if they’re “relative” numbers, how can Yelp claim *100%* greater traction than these third-party indicators?? A factor of 2x?? No way.
Wow. Do you think any of the former InsiderPages folks are depressed by this?
Post #36 is right. There definitely is some real money to go after — as a chunk of the $15B in print yellow pages moves online.
But serving small businesses is difficult work. And it’s not clear that Yelp has an appetite to tackle this — let alone already have mastered it.
Folks who are trying to build a business would test out a model(s) in several cities. And then once they validated one, would replicate it elsewhere. Without a profitable model in your early markets, what exactly will a salesforce and more office space do?
Wait a minute. Did I say build a business? I’m missing the point, aren’t I? Time to join the party. Where’s Stoppelman? Jeremy, we’re running low on wine.
Yelp is one of the standout websites of the last couple years for me. I have used 100s of new web services recently, but Yelp is the only one I have actually become devoted to. It truly helps locate the best spots in many cities - the only way you could do that previously was by asking lots of locals. The revenue issue is a big challenge, but the fact that they are a huge part of the decision making process for individuals seeking places to eat and shop, means they have a lot of value.
http://www.samlltown.com is a typo.
Try http://www.smalltown.com
hal, pretty nice local approach with SmallTown website, incredible look and feel, however, the dude that developed the interfase did not think for a second about Seo!, ugly from that standpoint !,
mariano.
Mariano -
That’s a good point on the SEO of smalltown. However, since it’s so targeted to small towns, would it get the volume it would need to appear in results anyway?
Thanks for the comment about Smalltown. FYI: One of our patent applications is for the methodology we developed to enable our site to be indexed and optimized for search. Smalltown Webcards show up in Google, Yahoo and other search results just like a webpage does.
Do a search at Google for “Carol Leong Electrolysis” and her Webcard is the top result. (At least as of 2/28/08)
Another example is Ana Furniture. Their Webcard shows up higher on Google than their website, and they’re not even a customer of ours yet.
- Hal
Mike -
I love TechCrunch and respect the way you handle yourself on tv. I blogged the following questions at the end of some comments about your back & forth with Glen Kellman at http://mpayy.blogspot.com/2008/02/wheres-beef.html
My questions respectfully are as follows:
* What is the scenario that drives these valuations, and how frequently is that “Winner Take All”?
* What is the exit for these companies, and how frequently is that assumed to be a strategic buyer in the form of Google, Yahoo or Microsoft?
* Online advertising rose 25% last year, and is expected to continue to rise. However, there is clear evidence that click-through rates are falling to an industry average of about 0.25%. Search engine marketing text links are higher, but are they concentrated enough among the highly atomized online publishing community to run a business based on this revenue stream?
* What effect does the “Bandwagon Effect” play in many of these investments in crowded sectors? Money is also flowing into the Open Social/Data Portability sector with a number of players, most recently Gmail-creator Paul Bucheit’s FriendFeed. Similarly, as I discussed here, survey participants expected Clean Tech as the sector most likely to receive investments and be over-valued in 2008.
Take care -
–
Trace
I find that the yelp reviews are indeed all over the map. What is more interesting - at least for me, is putting out a discussion posting saying something like “Dallas Yelper coming to San Jose, needs ideas where to go for local food…” and watch the discussion thread. That gets you through a lot of the review noise and because people who post on these kinds of sites seem to want to express themselves, I get some places I would otherwise never have thought of. Then it is time for some research.
As far as revenue, earnings, etc are concerned, I agree it is really hard to see how these folks will make much money/ Must be holding out for the mythical and mystical “event”.