Chinese Company Buys Majority Stake In Gay Dating App Grindr For $93M

Gay dating app Grindr has long been viewed as one of the great “bootstrapping” success stories of the tech world, self-funded from inception through years of dramatic growth.  It was therefore surprising to see the company sell off 60 percent of its shares to a huge corporate investor for a cool $93 million.

It’s even more incongruous that the investor is Beijing Kunlun Tech Company, a gaming company from China… where homosexuality was classified as a psychiatric disorder until 2001 and the BBC reports “gay people say they still face widespread social discrimination.”

VentureBeat notes there has, as of yet, been no announcement of Grinder expanding operations into China, which is viewed as a huge development market by outside social media providers.  Of course, it’s possible Beijing Kunlun saw Grindr as a profitable worldwide investment, even if the app doesn’t expand into the Chinese market.

The Beijing company certainly seems optimistic about its massive investment.  “We have been very impressed by Grindr’s progress to date and are extremely excited about the future of the company,” said Kunlun chairman Yahui Zhou, as quoted by the New York Times.  “We will continue to seek out and invest in high-quality technology companies led by top-tier management across the globe.”

“We have users in every country in the world, but in order to get to the next phase of our business and grow faster, we needed a partner,” said Grindr chief operating officer Carter McJunkin, which would suggest he thinks the Beijing partnership will open some doors.  Since Grindr already has users in 196 countries, there are only so many doors remaining to be opened.

The NYT also has McJunkin hailing Kunlun’s digital expertise, and willingness to allow Grindr retain its current staff and continue operating as usual.

Grindr is a classic boostrap start-up, founded by CEO Joel Simkhai with what the Times describes as “a few thousand dollars of his own money” in 2009.  Now it’s up to 2 million visitors a day and $32 million in annual revenue, steadily growing by about 30 percent each year.  When announcing the Chinese purchase of a majority stake in the company, Simkhai effusively praised his employees and partners for the hard work that made his company so valuable.

An effort to expand beyond gay and bisexual men didn’t pan out; as McJunkin put it, “We experimented in other audiences, but we decided we do the gay audience best.”  The rest of the online dating market is pretty well locked down, so clearly the new owners from China agree with this focus and anticipate continued success.

There are a few discordant notes in the Grindr story of bootstrapping success, including the general anxiety high-rolling Chinese businessmen are feeling due to market reversals, and some apprehension about the abuse of both gay and straight dating services by predators.

(VentureBeat notes that such concerns don’t appear to have damaged the popularity of dating apps by the youngest generation, which seems to have embraced online dating as a core element of the mobile social media experience.  Around the world this weekend, people are going to use mobile dating apps to connect with new love interests who turn out to be sitting less than a hundred feet away.)

The more interesting bummer note to the story is that Grindr’s success might be a path other bootstrap operations have difficulty repeating for the foreseeable future.  There is a sense that venture capital has peaked and begun to slide for a variety of reasons.  (GeekWire just reported venture capital activity in the American Pacific Northwest dropping by 59 percent in the fourth quarter; Venture for America founder Andrew Yang professed himself increasingly “nervous” about the mood in Silicon Valley last week.)

A new recession, perhaps triggered by financial downturns in Asia or Europe, would make that slide painfully obvious.  VentureBeat advises entrepreneurs to think more about “bootstrappin'” than attracting big investors.  In the age of Internet marketing and fundraising, that might be easier than ever to attempt… but in the age of intense global Internet competition, it might be getting harder to succeed.


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