Saturday, April 12, 2008

Show Me the Money (Angie's List Got $35 Million from Battery Ventures)

Bloggers blog for a lot of reasons, but many of us have some form of "monetization" in mind. Stay-at-home mommy bloggers have a chance to earn a little extra spending money through programs such as Google Adsense, Amazon affiliates, and paid post targeted advertising through companies like IZEA's PayPerPost and SocialSpark. As my headline indicates, some web site owners have bigger jackpots in mind.

While Angie's List is not truly a blog, but rather a subscription-based service for consumer-generated ratings and information on local contractors and service companies, it is a web-based directory that secured a $35 million round of funding from Battery Ventures, a Boston-based VC with a $750 million fund.

Formed in 1995, Angie's List Inc. is the operator of a web site that allows consumers to connect with and rate local service providers. Formed in 2005 and updated in earnest in January 2008, Roxiticus Desperate Housewives LLC is the operator of a web site that allows consumers in the Roxiticus Valley (Mendham, Bernardsville, Chester, Far Hills, Peapack-Gladstone, Morris and Somerset County, NJ) to connect with (and comment upon) local service providers. Click on the "Best of" links in the sidebar for more information.

Currently serving 600,000 members in 124 major cities across the United States, Angie's List will soon expand the service to the entire U.S. Rapidly approaching 5,000 visitors since February 2008, Roxiticus Desperate Housewives' service covers restaurants, shopping, kid stuff, summer camp, handymen, doctors and dentists, and other service providers in the Roxiticus Valley and will soon expand the service to include Bay Head, New Jersey and Laguna Beach/Orange County, California.

Angie's List Founder and Chief Executive Angie Hicks said the company is on track to do $40 million in revenue this year, double that of 2007. Roxiticus Desperate Housewives founder Bree Van de Camp said the company earned five hundred bucks over the past month, and is on track to earn an additional $2200 in time to have Ignacio Landscaping put a load of new stone on the Roxiticus Desperate Driveway this spring.

Battery Ventures invested $35 million in Angie's List Inc. in exchange for a minority stake in the company, with an eye toward serving a nationwide user base. Angie's List previously raised $13 million from Boston-based staffing firm Aquent, White River Ventures and BV Capital.

As my loyal Roxiticus Desperate Housewives readers know, in my life outside the blogosphere, my husband Rex and I own a small investment bank, helping entrepreneurs to maximize value by selling the companies they've built over the years. In the industry of my professional focus, a company is valued based on its growth rate and profit margins, and paid a multiple of trailing (and/or prospective) revenues and EBITDA (earnings before interest, taxes, depreciation and amortization). While we are merger & acquisition (and private equity financing) transaction-oriented, we also maintain a number of value-creation consulting relationships at the Board level, in which we work with companies and entrepreneurs for months or even years to help enhance their long-term enterprise value.

However, in the blogosphere with seemingly insane prices being paid for social networking services like MySpace, Bebo and DodgeBall (funny sidetrack: my niece introduced me to DodgeBall founder Dennis Crowley at a loud Jupiter Research party back in 1999, he told me he was working on a web site/new venture called DodgeBall and I kept thinking he said "Dog's Balls") and Microsoft's investment in Facebook, I'm not sure I understand the valuation metrics or how to maximize the enterprise value of Roxiticus Desperate Housewives. That's where Florida VC Guy (Dan Rua of Inflexion Partners) comes in. Via SocialSpark, I found Florida VC Guy, who is looking for Frequently Asked Questions by entrepreneurs that he could answer in a post on Florida Venture Blog.

So here are our questions, Florida VC Guy:
  1. How do VC's value an online venture?
  2. Do you have any advice on short, medium, and long-term strategies to maximize the value of a blog or online business?


Anonymous said...

I got to get on the ball. I was starting my first dating site around the same time that AL first came out, and it seemed like a pretty good site but not MIND blowing. And NOW look how things worked out. I'm trying to get 500 visitors a day and she....