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Grindr goes public or how to make money on love (and sex) of the 21st century

Latest NewsGrindr goes public or how to make money on love (and sex) of the 21st century

It is not surprising that the technological revolution has also touched the heart. In these times of liquid love, flirting in front of the bar has been replaced by a huge after-party, that is, social networks. This change in trend had already reached Wall Street in 2015 with the IPO of major dating social network Tinder, and was confirmed last year by the debut of its rival Bumble. Now it’s the turn of the flagship app in the LGTB+ community, Grindr.

As the social network told the US market regulator, the debut will take place through a merger with SPAC, a company created solely to buy other companies and bring them to the stock market. The operation will mean that 22% of the capital will be listed – the majority of 78% will be in the hands of its current shareholders, an American investment group that acquired it from a Chinese company in 2020 – and this big gay-friendly virtual bar is valued at around 2,000 million euros. .

The value of the firm is still much less than that of its main competitors. Match Group, the parent company of Tinder, is worth about 20,000 million euros on the stock market. Bumble, meanwhile, is valued by Wall Street at about $4 billion. However, the owners of Grindr believe that the investment in their social network has even more potential than those of its competitors, which cover both heterosexual and homosexual audiences.

The social network is a money making machine. It has 11 million active users and can earn $16 per user with a 51% margin compared to $13 per user and a 30% margin for Tinder. It has such a consolidated brand that it also barely spends 1% on ads, while Tinder spends 20% and Bumble, a more obscure one, almost a third of what it earns. That is, although it is a smaller social network, because it is targeted at a certain niche of the population, it is more adept than its competitors in converting every love encounter it encourages into euros.

Its main strength is that Grindr is able to capture the attention of its users like no other social network. On average, users flirt on this platform for an average of 61 minutes. This is an unattainable mark not only for its main competitors (Tinder averages only 18 minutes), but also for other social networks. Internet users spend half as much time on Facebook and Twitter than on Grindr.

All of this suggests that Grindr accounts have skyrocketed in recent years. If in 2016 it reached 55 million and its EBITDA was only 8, then the company ended 2021 with revenue close to 150 million, which is 30% more than the previous year, and EBITDA was 77 million, up 53% more. He hopes that this growth will not stop there and that the revenue will grow by 35-40% this year, and the EBITDA will reach 50%.

The company boasts very good accounts. The IPO will also allow the company to pay off nearly all of its debt and keep testimonials below $50 million. It will also mean a cash injection of around $100 million. And it will allow current shareholders to take advantage of the firm’s good performance and receive an extraordinary dividend of $370 million.

The management of Grindr, founded in 2009, believes that the possibilities of the social network do not end there. The first of the arguments they use to convince potential investors is the growth potential they see in the LGBT population. They believe that the fact that society is shedding preconceptions about sexual options other than heterosexuality opens up huge new business for them. Especially in the new generations, in which they consider themselves four times closer to the LGBT movement than boomers, by their own calculations.

Currently, 80% of Grindr’s 11 million users are under 35 and over half are under 30, representing about 560 million non-straight people worldwide. The numbers, which they hope will rise sharply in the coming years, with the number of LGBT people reaching 660 million in 2026, representing 8% of the world’s total population.

Risks and weaknesses

Thus, there are two main problems and growth niches identified by this social network. First, to attract that audience over 35 years old, which usually has a higher purchasing power. And, on the other hand, improve their subscription services, since most users pay nothing for their use.

The penetration rate of those who pay is 6% compared to 9% for Bumble and 18% for Tinder. His predictions to catch up with competitors are optimistic and based on the suspicion that LGBT people have a higher standard of living than heterosexuals. To confirm this, they proceed from the fact that, according to their data, there are more homosexuals with higher education than heterosexuals, as well as earning 18% more, spending 30% on leisure and 36% more traveling.

Surprisingly, Grindr is more profitable than its competitors, but much less of them pay to use it. Fear hovering over him at the value of the data he keeps: in practice, a list in every country and every city of gay men who inhabit it. This is what led the US government two years ago to force its former Chinese owners to sell the social network, fearing that all this data would be used by the Asian giant.


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