ANDREWCHEN - May 28 - It’s hard to get a dating product funded by mainstream Silicon Valley investors. They refuse to invest in the dating category in the same way that many refuse to invest in games, hardware, gambling, etc. Here are the reasons usually given for why investors don’t do dating:
The better your dating product works, the more your customers will churn. The churn rate for dating site is usually 20-30% monthly = 93% annual churn. You have to have a strategy to replace almost your entire customer base each year.
Dating has a shelf-life
Being "in the market" as a single person looking to meet others has a limited time window.
Paid acquisition channels are expensive
This is an area where the new mobile dating apps excel. They have the ability to tap into organic viral/word-of-mouth installs.
City-by-city expansion sucks
Dating products inherently rely on a local marketplace, and bootstrapping a series of marketplaces is very hard, and expensive.
Hard to exit
The lack of exits might be more the result, not the cause, of investor disinterest in dating.
This post also appears on OnlinePersonalsWatch.