Deal Radar 2008: eHarmony Replacing Yenta

eHarmony is an online dating/matchmaking site that uses its patented Compatibility Matching System™ to match singles.

In November 2004, eHarmony raised $110 million in a Series B round of financing from Sequoia Capital, Technology Crossover Ventures and Tuputele Ventures. It had earlier raised $3 million in Series A from Sarofim Fayez and Co.

eHarmony has over 17 million registered members and around 10,000-15,000 new members sign up every day. On average, 90 people who met via eHarmony get married every day. So if you are single and thinking about finding someone, eHarmony sounds like a place you ought to visit.

The site is expected to earn $200 million in revenues in 2007 and is a profitable business. It earns revenues from subscriptions, which start at $59.95 per month or $251 for a year. It also sells gift subscriptions; paid subscriptions have been growing 30% YoY. eHarmony expects to have $100 million in cash by the end of 2007.

eHarmony spends heavily on advertising and spent over $110 million in 2006.

eHarmony was valued at $350 million pre-money valuation when it raised $110 million in 2004. The site is expected to hit the market with an IPO with a very high valuation soon, except the impending slowdown in the US economy and a bleak outlook may put a slight damper on its plans. It could still do an IPO at 6 times its revenues of $200 million at $1.2 billion this year.

The company is a good acquisition target for Gannet and McClatchy, who have been losing out on personals/matchmaking advertisement revenues due to their shift online, although its investors may have their eyes set on a different type of acquirer, if acquisition is the route they want to pursue.

New media companies like Yahoo! and News Corp could also look at acquiring eHarmony.

This segment is a part in the series : Deal Radar 2008