Tech and dating: How you can score funding and help millions find love
If you’re aged between 18 and 34, the chances are that looking for love – or hooking up – will involve a lot of right and left swiping on Tinder, as opposed to engaging in some good old-fashioned bar flirting.
But while US giant Tinder – now available in more than 190 countries and registering an average of 1.4 billion swipes every day – may have become synonymous with dating tech, there’s no reason to feel disheartened if you’re a tech entrepreneur looking to crack the market.
Online dating is a lucrative industry – recent research estimates that dating apps contribute a staggering £1bn to the UK economy every year – so it’s hardly surprising that new services, both big and small, are springing up faster than you can say ‘I love you’.
How can tech startups and scaleups break through the noise? And will we ever see a UK homegrown dating tech success story?
The VC standpoint
There’s no denying that VCs are eyeing the sector. Matthew Bradley, an investor at early stage London-based VC fund Forward Partners, is just one of many.
“It’s a very competitive market, though there’s a gorilla in the form of Match Group. Helping people to find partners is an old business and it was one of the first consumer propositions to make it large on the web,” Bradley told Tech City News, highlighting that competition in the sector exists at many levels.
Whether it’s end-goal or outcome driven (eg Tinder vs Hitch), or in terms of process innovation (eg Happn vs Bumble), sexual preference (eg Grindr vs HER) or within a niche sector (eg GlutenFreeSingles.com), tech companies are increasingly fighting to gain consumers’ attention.
This is where it gets tricky. Ask your friend, sibling or colleague if they’re dating online. If they are, the likelihood is they’re doing so on many different platforms.
“It’s clear that there’s not a good deal of user loyalty. People are active on multiple platforms – perhaps to enjoy the game, perhaps to maximise chances of an ideal outcome,” Bradley continued, adding that there seems to be a noticeable shift in the industry toward establishing more meaningful connections.
“Many have noted that while sex has never been easier to find, it has never been harder to find love. This sentiment is partially a commentary on the Tinder generation, but also the societal impact of technology in a broader sense,” the investor claimed.
Investment
Well-funded companies in the space include Happn ($22m), Hinge ($12m) and Once ($9.1m), but figuring out what investors really look for in a dating-tech company is not always entirely obvious.
“A viable revenue model would be a good start,” Bradley said, admitting that this could be hard to find.
“There are great businesses to be made within preference verticals – unit economics can be made to work there – but in the wider market, making money is tough,” he added.
Bradley is right: monetising dating isn’t easy. The ‘free’ part of freemium business models, he added, seem to suffice in most cases, especially when users are active on more than one platform. On top of that, dating apps don’t always make good advertising platforms.
Innovations such as super-likes, nudges or coins may serve as a counter risk and help bring in some revenue, but as far as most investors are concerned, this is just small change.
“For most dating tech companies the only way to pay back investors seems to be to reach a critical scale of users and be acquired by the Match Group. That’s a high risk game,” Bradley said.
UK vs US
Bradley, a US and British citizen, believes US culture, particularly the underlying tech culture, is one of the driving forces in the industry.
“Well tested, well funded propositions run by super-clever people will always make a mark. The US has the strongest tech ecosystem and as a result leads the way in a lot of markets, particularly consumer ones,” he added.
But that’s not to say the UK can’t compete in the global arena. In fact, Bradley says there are still opportunities to innovate on process, move into new verticals and address local idiosyncrasies.
“We’re super strong with regards to data science, AI and machine learning and there’s no reason why the next gen can’t emanate from the UK,” he said.
According to Bradley, experimentation and iteration is already happening across the industry. Hinge, he said, has abandoned gamification (aka the swiping element) and is explicitly looking to position itself as a matchmaker for people looking to find long-term connections.
This aside, Bradley, whose job requires him to look out for early stage companies in which to invest, says he’s seen a new batch of dating-tech startups looking to leverage machine learning to improve the way in which users are matched. But this, he noted, is still a long way off.
“Intuitively, dating apps (less so the form-based model used by Match and Plenty of Fish), throw off a lot of data with swipes, pictures and interactions.
“There’s also plenty of social data to get your teeth into. I don’t doubt that adding intelligence to data-rich companies will improve products, though, for the time being, I don’t think that it will be transformational,” he explained.
“We’ve got a good way to go in understanding our online selves, our offline selves and everything in between before next-gen dating arrives,” the investor concluded.
While technology is able to help us in many ways, it often relies on societal changes to take place in order for it to fully succeed. So, there’s still plenty of work to be done in the offline world if peoples’ love-searching online is to bear fruit.