LGBTQ dating app Grindr to go public: All you need to know
- Grindr LLC has decided to go public through a blank-check firm in a deal
- The deal is valued at $2.1 billion including debt
- The primarily male dating app will merge with Tiga Acquistion Corp
The primarily male dating app will merge with Tiga Acquistion Corp., which launched in November 2020. The special purpose acquisition business does not provide any private investment in public equity (PIPE) transactions. Grindr will get an estimated $384 million from the business combination, which it will utilise to pay down debt and bolster its balance sheet.
Prior to engaging in the partnership with Tiga, Grindr, based in West Hollywood, California, was approached by a half-dozen SPACs, according to Chief Financial Officer Gary Hsueh in an interview.
“From our perspective, we’re ready to be a public company,” he said. The SPAC approach, rather than a standard IPO, "made more sense because it had certainty and that’s even more important today than it was a year ago when the market was different."
Tiga shares gained approximately 1% in extended trade in New York.
The IPO is a significant step forward for the 13-year-old company, which has changed hands multiple times over the years. After U.S. regulators encouraged a divestiture due to national security concerns, Chinese business Beijing Kunlun Tech Co. sold the company to San Vicente Acquisition Partners LLC for $600 million in 2020.
While competitors such as Tinder by Match Group Inc. and Bumble Inc. are LGBTQ+ friendly, Grindr is the most popular among members of the community. The app has roughly 11 million monthly active users, which is a fraction of Match's 100 million users across all of its applications, including Tinder and Hinge. According to corporate documents, competitor Bumble Inc. had 40 million monthly users last year. Almost 80% of Grindr users are under the age of 35.
“The number of people who identify as part of the queer community has increased so dramatically,” Chief Executive Officer Jeff Bonforte said that this is largely due to people feeling secure embracing their identities.
Bonforte intends to quit as CEO in the second half of the year, as the company has identified a member of the LGBTQ+ community who has headed a public company to fill the position. According to a spokeswoman, the board will be made up of a majority of LGBTQ+ individuals. Grindr declined to reveal the name of the CEO applicant publicly.
Grindr, like other dating apps, offers a free service with upgrades available for purchase. Unlike its competitors, the programme allows users to view and communicate the profiles of the 100 individuals closest to them without initially matching. As of the end of last December, Grindr had 723,000 paying customers.
According to the corporation, revenue excluding certain things increased by 30% to $147 million in 2021, with adjusted earnings before interest, taxes, depreciation, and amortisation increasing by 51% to $77 million. Grindr expects adjusted sales growth of 35% to 40% this year and 35% to 40% in 2021.
The majority of Grindr's revenue comes from subscriptions, with a lesser percentage from advertising. The Wall Street Journal revealed that a digital advertiser sold location data that might compromise customers' identities, causing the corporation to confront user privacy difficulties.
Grindr has chosen to go public via an investment vehicle that was once one of Wall Street's biggest trends, attracting financiers, politicians, and celebrities who were able to make easy millions from investors pouring money into them. However, the lustre has worn off when regulators unveiled fresh proposals to tighten monitoring of SPACs, including exposing underwriters to increased liability risk.
According to Bloomberg, Goldman Sachs Group Inc. is withdrawing from dealing with the majority of the SPACs it took public, casting uncertainty on the fate of billions of dollars generated for them.
Grindr's SPAC transaction is likely to completion before the end of the year, subject to regulatory and stockholder clearance.