April 10, 2008

Angie’s List Gets $35 Million in New Investment From Battery Ventures

Jason Kincaid

37 comments »

Everybody’s got an opinion, and if you can collect them together that can be worth quite a bit of money. Angie’s List, one of the largest sites for local service provider ratings, has received $35 million from Battery Ventures, bringing its total funding to $48M. Battery will now hold a minority stake in the company.

Angie’s List was founded in 1995, and provides users with customer reviews on a variety of services, including plumbers, roofers, and handymen. The site has over 600,000 members in the United States, and it soon plans to expand abroad. Users must pay a fee starting at $35 a year to access content, but free trials are granted for a year in cities that have been added to the site recently. According to comScore, its traffic has been flat, with only 214,000 unique visitors in February.

Angie’s List had previously received $13 million in funding, largely from Aquent and BV Capital. Battery Ventures manages almost $3 billion in capital. Competitors to Angie’s List include Yelp and Kudzu.

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Angie’s List lands $35 million in new funding - Lost Remote TV Blog

April 10th, 2008 at 3:16 pm

TechCrunch Japanese アーカイブ » Angie’s ListがBattery Venturesから$35M調達

April 10th, 2008 at 6:21 pm

Inversión de 35 millones en Angie’s List

April 11th, 2008 at 3:34 am

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Alaska Miller

April 10th, 2008 at 2:35 pm

That’s quite a chunk of change for a craigslist/yelp clone.
billy

April 10th, 2008 at 2:39 pm

wow…does that mean we will see more bad commercials?
damon

April 10th, 2008 at 2:41 pm

$23M for a minority stake, must be a nice valuation!
damon

April 10th, 2008 at 2:43 pm

what is with that goofy ass “magazine”

they should be penalized $23M for that thing
Afraid of the dark

April 10th, 2008 at 2:46 pm

ebay bought 25% of CL for $48M .. that was a deal
bob

April 10th, 2008 at 2:47 pm

If they can keep the craigslist wackos away, they should do well.

http://www.craigslist.com
jenkins

April 10th, 2008 at 2:51 pm

This is another bizarre valuation based on very little revenue and even less reality. Add them to the deadpool and someone p-le-a-s-e pop that damn bubble!
Jon carder

April 10th, 2008 at 3:01 pm

Wow, impressive work to be able to raise that type of cash when their traffic is stagnant compared to others in the local search space. Not to mention the critical flaw in their business model. Having consumers pay to access local business reviews is a business model that will eventually get crushed by the free sites like Yelp.com, MojoPages.com and the 25 other local business review sites that don’t charge for access.

600,000 members? They’ve been advertising 500,000 paying members since 2006, that type of growth is just too slow to survive. Most local search sites are growing by millions of users every year, not 100,000. My guess is they’re probably loosing paying customers to the free sites and having to advertise like crazy to add enough new members to “appear” to be growing.
B

April 10th, 2008 at 3:13 pm

Actually, I think Angie’s List is doing it right compared to Yelp and Judy’s Book. They are getting a monthly subscription fee from their users and not having to worry about the high cost of local ad sales. They roll out to new markets gradually to allow expenses and revenue to be matched closely. The people paying are the ones getting the most value from the service. I know, kind of old school for tech crunch.
Peter Dorntby

April 10th, 2008 at 3:26 pm

@Jenkins - I just wonder why do you think they have little revenue. Do you know for a fact or just guessing? As far as I know, Battery never invests in bubble like things. Why would you think it’s different this time?
Il Goon

April 10th, 2008 at 3:34 pm

Battery is an uncommonly saavy investor - I have been a sr. exec at a portfolio company of theirs and have to say Angie’s List would have been hard pressed to find better company, and at such a rich valuation to boot.

Battery doesn’t hire dummies - there’s got to be something more here than the above posters have covered, or the public at large knows about.
Brad Murphy

April 10th, 2008 at 3:53 pm

Hate to rain on this parade, but I’m a web entrepreneur and a passionate remodeler who routinely uses Craigs List to vet local service providers and contractors.. Have tried Angie’s list and frankly, it’s not nearly as useful to me as Craigs List… I don’t trust the review on Angies List (partly because there are so few)… What happened to good old fashion reference checking? Wow, maybe these guys know something I don’t know.
LOL @ Silly People

April 10th, 2008 at 4:01 pm

Angie’s List is a great company. It’s hilarious to find the free-tards on here complaining about the paywall. Get over it. Most good things provided by BUSINESSES are NOT free. Don’t come at me with the Google example. Good. Now show me good free housing? Oh doesn’t exist. What about good free education? Again, doesn’t exist. Either the government is paying or you are.

Grow a brain folks. Angie’s List is a real business.

Also, stop this idiotic “marginal cost is 0, so don’t charge me for content” b.s. Marginal cost does not equal cost. Cost does not equal price. Learn economics. You charge what people are willing to pay, not some percentage above your cost.
MikeW

April 10th, 2008 at 4:15 pm

Useful tool, terrible web application. Needs to be rebuilt from the ground up. Terrible, terrible, terrible. Not terrible in the way Craigslist is terrible, terrible in the sense that it doesn’t work.
Amy Wilsch

April 10th, 2008 at 4:19 pm

I remember seeing their ads in the newspaper all the time, seemed to fit well there. Every contractor (electrician, plumber, etc) I’ve ever dealt with don’t spend much time on the computer (they’re “in the field” all day), don’t have websites and rely on the yellow pages and local advertising. Will be interesting to see who is the first to really get the local service market right.
Matt Moog

April 10th, 2008 at 4:24 pm

At $50-$75 annual subscriber fee Angie’s List is likely to be generating $30mm+ in annual revenue. If you believe the 10x revenue comps in for pure web plays, than a $300mm+ valuation would be possible. I would suspect they have more revenue than the other leading local review sites including Yelp the media darling.

As much as the “free-tard” comment made me laugh, I too don’t understand why consumers would pay $50+ a year just for reading other consumer’s reviews of local service providers. One would think that the long term availability of free content that is not only comparable but better will be a strong head wind for Angie’s List. I say better because free consumer reviews sites will eventually get more reviews from more consumers because their audience will be larger than 500,000 subscribers.

All that said, I can tell you as an entrepreneur who has raised $5 million dollars in the last 18 months to launch a consumer reviews start up, there is a siginicant amount of room in the space for innovation. At Viewpoints we have built an audience of 500,000+ uniques in our first six months since launch.

Angie’s List publication might be a bit dated, and the premium subscription product out of step with the current thinking, but you cannot argue with their success in generating real paying customers and in the process building a understated, credible and well known brand.

As is the case with many of web business models, it comes down to execution, innovation and staying power. With this latest raise, they certainly have staying power. We will all have to stay tuned to see if they can be innovative and execute in a constantly changing competitive enviornment.
Mary Baum

April 10th, 2008 at 4:51 pm

I canceled my Anglie’sList subscription some time back after I realized that the contractors might be well-rated, but they were no more accessible than the ones in the phone book. Only a limited number of them were willing to work in my inner-ring suburb, and almost none of them had email or any web presence. That meant I was back to calling phones that weren’t necessarily answered, leaving messages that didn’t necessarily get returned — not even Web 1.0 service. Why would I pay AngiesList for that?

Contrast that with ServiceMagic, which I used before to get new central air, gutters and some interior ceilings replaced. It’s no contest.
Noah "Like The Ark"

April 10th, 2008 at 5:24 pm

I would love to get that much in investment money!
Brandon

April 10th, 2008 at 5:25 pm

Hot Damn…. There is more than corn in Indiana. Congrats AL.
jro

April 10th, 2008 at 5:52 pm

@16: I think your math is a bit off. They’re claiming 600K users and get $35/year in fees. That equates to $21MM in recurring annual revenue. The 10x revenue math puts their value at 210MM.

But, if you’re company is bringing in $21MM in revenue annually, and you’ve taken $13MM in investment thus far, taking $35MM in another round makes zero business sense. Unless, of course, those revenue numbers are potential, i.e. based on the 1-year free registrants, but not actually being collected.

They’re doing a good job in a tough business (local search), though. Got to give them credit for that.
Bisi

April 10th, 2008 at 5:58 pm

LOL !
People never ever do any research ..

Angieslist is not a clone . The site is 13 years old for goodness sake .

They Bring in about 15M a year .

A lot of people think that making money on the internet is all about eyeballs . This is not true .

A busier site does not mean a more profitable one . If I open up a free restaurant beside one that charges for food I am sure I will have more customers .

Free sites are not necessarily competing with paid sites even though there can be an overlap of potential customers . There are those who dont mind paying and there are those who are just cheap .

Its like saying a Mercedes dealership will flop because a Hyunda dealer just opened next door .

Or

Saying that Brusters with their $5 ice cream will flop because you can buy a whole bucket of ice cream from Walmart for $5 .

Or ..Ok last one

Saying that no one will pay for 1st class when there is economy .

Ok …Last One

Its like saying no one will go to private school because there are public schools .

The list is endless . You just have to know your market .

References -
http://en.wikipedia.org/wiki/Angie’s_List
http://www.collegenews.org/x5883.xml
http://www.angieslist.com/angi.....aspx?i=114
M

April 10th, 2008 at 6:00 pm

For those of us (me included) that don’t think it makes sense to pay a fee to look at reviews, there are always people who will pay when others won’t.

I met someone who loves Angie’s List. She had 1 kid, 2 nannies and also paid to watch her kids play in a public park. Oh to have money. If this is Angie’s demographic then there is more value possible around that subscription fee.

Maybe it’s what’s not there that Battery is after. Isn’t that what invested capital is for…
B

April 10th, 2008 at 8:25 pm

While it’s true that you can get free reviews on Yelp, there is something to be said for having a bar on reviews from other people paying $35 a year (instead of Yelpers who review the restaurant that hosted that last Yelp party).
Chris

April 10th, 2008 at 10:27 pm

What the heck do they need all that money for?

But anyways…I can see how the reviews could be much better because those in the system are paying to see the reviews so are probably offering better reviews themselves.

I’ve never had much need for sites like these myself as word of mouth between friends and family has been able to connect me with everything I need.

But you can’t argue with the success of Angie and Yelp.
Daniel Larsson

April 10th, 2008 at 10:45 pm

I have a blog-network in the entertainment niche with 3 million page views a month and will totally sell it for much less than $23 million
Lyn Smith

April 11th, 2008 at 2:52 am

So if they got $35m with approx. 350,000 unique visitors each month, that should mean that with my 4,000 unique visitors each month, I can get $400,000 - sweeet!!
Steve

April 11th, 2008 at 6:14 am

Is it just me — or does Angies list feel very “Web 0.2″?

Their site is sparse. Their traffic is light. Their monthly .pdf magazine is quaint, I guess. Probably just a case of having selected a name close enough to Craig’s to get some halo effect.

There’s heat in this space no doubt. ReachLocal and Yelp are overvalued too. Blame it on the $14B in print yellow page advertising that sits waiting to be poached.

Kudzu.com is interesting. Not really “national” yet — only has critical mass in markets like Atlanta, Phoenix and San Diego. But when you look at its depth in those markets, it makes Angie look quite weak. And unlike Yelp, appears to have real advertisers — not just restaurant reviews.

But, in fairness, this is hard.
Bisi

April 11th, 2008 at 6:41 am

LOL !
People never ever do any research ..

Angieslist is not a clone . The site is 13 years old for goodness sake .

They Bring in about 15M a year .

A lot of people think that making money on the internet is all about eyeballs . This is not true .

A busier site does not mean a more profitable one . If I open up a free restaurant beside one that charges for food I am sure I will have more customers .

Free sites are not necessarily competing with paid sites even though there can be an overlap of potential customers . There are those who dont mind paying and there are those who are just cheap .

Its like saying a Mercedes dealership will flop because a Hyunda dealer just opened next door .

Or

Saying that Brusters with their $5 ice cream will flop because you can buy a whole bucket of ice cream from Walmart for $5 .

Or ..Ok last one

Saying that no one will pay for 1st class when there is economy .

Ok …Last One

Its like saying no one will go to private school because there are public schools .

The list is endless . You just have to know your market .
Skip

April 11th, 2008 at 8:58 am

Note to Bisi.

It’s true that Angie’s list is alone in its model (i.e. not a clone) — could there be a reason? And do you really think it’s like Mercedes?

Whatever, obviously Battery does — given the luxury class price.
Dan

April 11th, 2008 at 9:42 am

The review site are old school! Most good reviews are made by the listing companies own employees and the bad ones are from customers you could never make happy even if you gave the service away for free!

The next service directory site is http://www.mycityfaces.com no reviews, clean, simple and easy to navigate. Profiles are like “Electronic Billboards”
K

April 11th, 2008 at 12:30 pm

I don’t understand how you refer to Angie’s as “one of the largest sites for local service provider ratings.” By your own charts you show them with 200k UV’s. Then you show Kudzu & Yelp with numbers that dwarf that.

I did have a free membership to Angie’s a while back but let it lapse. I just didn’t see the value in reviews only. While Yelp’s nice for finding he scoop on bars, I prefer using Kudzu to find service people. The reviews help, but it’s the profiles that really let me narrow down my decision. I’ve found a variety of folks from a tile guy, to a great photographer for holiday photos, to a maid service I’ve kept for longer than my subscription to Angie’s list. For the maid service, the reviews were key, but for the other ones, it was the profile. - imagine hiring either of those without being able to preview photos!

I finally put a profile up for my design firm and have gotten business out of it. As a business, I’m happy to pay Kudzu, but as a consumer, I just don’t see paying Angie.
LOL @ Silly People

April 12th, 2008 at 1:42 am

@ 25 Daniel - you couldn’t because your traffic probably has a crappy eCPM.
Bisi

April 12th, 2008 at 11:23 am

Skip - I don’t really know if its like a mercedes . I have not test driven yet, but I can tell you that Angieslist is in the business of making money . Angie and her people are not concerned about having the most uniques or pageviews or even the most reviews . They are only worried about paid subscribers . Obviously I would like to believe they are doing something right . If I had to pick a revenue model I would go with Angieslist because they are obviously making money and getting valued very high for equity purposes . Sometimes the most profitable companies are not the coolest and many times the coolest companies are not making any money . They are just cool .