SAN FRANCISCO (03/09/2000) - Gay.com is $23 million richer. The portal announced today that it received its first venture capital funding from Flatiron Partners, Chase Capital Partners and IDG Ventures.
Other backers of Gay.com's parent company, Online Partners, include Chase Capital Partners Europe, Macluan Digital Partners of Canada, Jesse.Hansen.CoVe and Baroda Ventures. Baroda founder David Bohnett, who also founded GeoCities, was named chairman of the board of Online Partners, according to Lowell Selvin, the CEO of Online Partners.
Meanwhile, Times Company Digital, the Internet division of the New York Times Co., will also become an equity holder in Online Partners, and will distribute its content on Gay.com. Prior to this round, Gay.com had raised $5.5 million in a series of smaller rounds, primarily from angels such as Bohnett. The time was right for VC funding on this level, though, now that Gay.com can boast of ad deals with a bevy of companies, including American Airlines, General Motors, IBM and Macy's. In February the site hosted more than 2.3 million unique visitors and 9 million total visits, according to DoubleClick DART audited reports. And when it comes to the duration of time users spend online, Gay.com is the top-ranked affinity portal, according to Media Metrix.
"We had to turn people away and cut people back," Selvin says of investors. "I could have raised more money than we could possibly need in this round." The presence of high-profile VCs in the current round "underscores not only the value of the market, but the real potential, and the fact that it is okay to serve the gay and lesbian community," says Selvin. "Not only is it a viable market, [so that] a company can build economic value - but, sociologically, it's a good thing to do." With the money, Gay.com plans to beef up its technology, staff and infrastructure.
It will also look into mergers and acquisitions that will help it expand globally - most likely beginning in Canada and the U.K., according to Selvin.
The site currently gets 500,000 unique visitors from outside the U.S. per month, including 300,000 a month from Europe and 110,000 a month from the U.K.
Rival PlanetOut.com was the first Net company targeting gays and lesbians to receive venture capital money. The company raised $16.4 million last September from Mayfield Fund, America Online Investments, Eden Capital of the U.K. and some angels.
Angel investors also contributed $3 million during an earlier round in 1995.
PlanetOut CEO Megan J. Smith praises the announcement as a further validation of gay and lesbian portals. "They're very strong at serving a particular group within the gay and lesbian market, and they're building a good business," she says, referring particularly to Gay.com's strong chat section.