According to a Pew Research Center report, 11% of adult Americans have used an online dating site or mobile dating app. Of these, nearly 66% have gone on a date with someone they met through these dating sites. In 2005, that share was a comparatively low 43%. Further, the online dating sites have helped nearly 23% of these people to find their life partners, compared with 17% in 2005. Another report estimates the online dating market to have grown 3.5% annually over the five-year period from 2008 to 2013 to be worth $2.1 billion in the country.
San Francisco-based Zoosk Inc. is among the successful players in the online dating world. The company was founded in 2007 by Shayan Zadeh and Alex Mehr with the mission to “empower everyone to lead a more fulfilling love life”. Today it owns an estimated 2.9% of the $2.1 billion online dating market.
Zoosk uses smart algorithms to help the user select an ideal partner. It gained popularity through its flagship Behavioral Matchmaking technology that tracks the user’s online behavior to determine the person that they would be most compatible with. Zoosk tied up with Facebook and used Facebook’s trove of users who were posting personal information and photos as its chief data source. As a result, the site has more than 40 million active members. It is the highest grossing online dating app on the Apple App Store and is the overall leader in mobile dating apps. Zoosk’s services are available in more than 80 countries across 25 languages, making it a “truly global online dating platform”.
Zoosk lets users sign up for free on their web site. As part of their free membership, they can create their profile, search for partners, and send introductory messages. Additional premium features are available at a fee. By paying a subscription fee of $30 a month or $120 a year, users can have additional features such as enhanced access for chat, messaging, and the ability to send virtual gifts and find out who viewed their profiles. Their matchmaking engine offers three discovery tools to their users. They can use the Scientific Matchmaking Service that offers a daily introduction to a potential match, or access profiles through a Carousel of profile pictures, or use the simple search function to search through their profile database. As part of their user retention features for people who have already found their partners, Zoosk also offers discount date deals.
In a report published last year, Zoosk reported revenues of $40 million in the first quarter of the year with their memberships doubling over the year. That translates to an annual turnover of $160 million. Revenues of $90 million were recorded in 2010. A detailed breakdown of their financials is not available, but analysts believe that the company is either running on very thin margins or even operating at a loss.
Zoosk is venture funded and has received $61.6 million in funding from ATA Ventures, Amidzad Partners, Canaan Partners, Bessemer Venture Partners, Crosslink Capital, Keating Capital, and Jeff Epstein. They are eyeing an IPO this year and have already identified Bank of America as the lead banker for the IPO. The IPO funding is expected to be used to bolster sales and marketing efforts.