Dating app Happn “not afraid” of Tinder as it raises $14m and tops 6.5m users
10 min read
06 October 2015
Happn, the dating app that connects you to passers-by, has secured a $14m (£9.2m) Series B under a year after it raised $8m (£5.1m). With a growing army of users that's set to top ten million by 2016, we spoke with CEO and founder Didier Rappaport about challenging prolific rival Tinder and plans to continue the rapid growth.
The online dating industry is a well populated sector, filled with startups and long-running firms that are looking to capitalise on modern romance.
In July, Real Business spoke to Ross Williams, the founder 12-year-old business Venntro Media. Not only is the the company a veteran in its field, Venntro is one of the UK’s fastest growing companies among all sectors, boasting a 45.51 per cent CAGR and a revenue approaching £50m.
With the business model firmly in place, Venntro monetises through a combination of cross-selling, advertising and subscriptions, but the main win is its White Label Dating service which provides the framework for third party dating sites.
With new players arriving in the sector on a regular basis – some of which are acquired by Venntro to enhance its portfolio – Happn entered the scene in January 2014.
While Tinder connects users based on yes or no swipes, Happn works with a location-based principle that connects to people they’ve actually passed on the street.
The app was launched by French entrepreneur Didier Rappaport, but why did he want to enter a competitive market that’s already so congested?
“We saw an opportunity for a new concept that brings value to the people. Looking at dating website history, it’s extremely virtual. We thought about meeting people and that’s very much here and now, so real life is at the heart of Happn’s concept,” Rappaport told Real Business.
“Today we grow at around one million new users per month, and that shows people really feel something when they go to Happn and see the timeline of people they’ve encountered. It’s a new concept and brings the real world to the virtual dating industry.”
With the user base in mind, the firm has now topped 6.5m users and is on course to reach ten million by the end of the year.
Happn isn’t Rappaport’s first venture. He was the co-founder and COO of video site Dailymotion, which launched back in 2005, and said that his experience has been an asset when getting his new startup off the ground.
“I’ve done so many mistakes in my professional life that many won’t be repeated. When I started Happn I knew I had to provide users with an excellent pain-free service and monetise from day one – not to find them after months of existence,” he explained.
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Rival dating app Tinder, for example, started operating in August 2012 but the free app didn’t truly start concentrating on revenue for a couple of years.
With an estimated 50m users, Tinder finally looked to capitalise on them with the introduction of Tinder Plus, which unlocks enhanced features for a fee, in March 2015.
By comparison, Happn had a freemium model in place from the beginning.
The trend is common in mobile games and Rappaport believed the “disruptive business model” would be a success compared to the traditional subscription-based effort that has been found in the dating sector previously.
It means Happn can be used for free, but access to extra features such as charms, one of which allows sending of music via Spotify, can be bought and used for a charge – similar to Tinder Plus – in attempt to woo love interests.
Interestingly, the charges only apply to male users, however.
“In the beginning, the industry was like that. I would like to say it’s the French way of love – the men pay and women are invited. In fact, it was an easy choice,” Rappaport explained.
“If I had to do it today maybe I would change it because equality is very important – but sometimes, even the women that love equality also like to be charmed by people who have made some effort.”
Continue reading to find out why Rappaport isn’t concerned about an exit strategy, how the new investment will take the business forward and why there’s no fear where rivals are concerned.
Happn boss Rappaport explained one thing that was important for growth was not remaining in his native France for too long, so an international strategy to scale from the Paris office was always on the agenda.
The firm’s approach targets cities rather than countries and counts Sao Paulo, London, Paris, New York and Buenos Aires as the areas with the largest user bases.
Having raised $8m (£5.1m) in December 2014, which has now been followed up with a a $14m (£9.2m) Series B investment, the company is looking to achieve additional scale by pushing into Asia and enhancing existing markets.
Idinvest led the September round with participation from Alven Capital, DN Capital, Raine Ventures and private individuals.
Guillaume Durao, investment director at Idinvest called Happn “one of the most international Paris-born startups”.
He added: “We were impressed by the fast, global growth of Happn’s user base and by the app’s early retention and conversion metrics when we first met the management team.
“We believe in the very fresh and modern product developed by the company and the positive, urban, trendy and fun associations made with the Happn brand in the dating space.”
Extra staff will be brought in to help lead the expansion effort, as Rappaport revealed more senior staff at C-level will be brought in to support the international push. As such, the Paris HQ is set to rise from 50 people to 70 by the end of the year.
“We hire native people from the countries we target so local language is spoken at the office, which helps localisation,” Rappaport detailed.
Given the nature of the business, skills and experience are varied, as he added: “Depending on the function, we also have lots of high school and art school graduates too. We look for those who are proactive, very curious, and who can fit with company culture.”
With youthful employees, the app itself is marketed towards singles aged 20 to 30, but that hasn’t stopped organic downloads from people aged in their 40s and 50s, which Rappaport admitted was a surprise.
Looking to 2016 and the future, he said that some cities will be reinforced and increased.
For example, New York and San Francisco are supported, but Chicago, Boston and Miami are yet to receive optimum marketing and performance for the app. Elsewhere, London has been a a key area with its 600,000 users while locations like Liverpool and Manchester have grown naturally.
While disruptive rival Tinder is owned by the Match Group, Rappaport has no exit plans for Happn and considers them a distraction.
“I have always built my companies thinking of the product and build for users the best way I can,” he said. “I don’t want to be disturbed by other challenges – that doesn’t interest me. There could be a sell, but it’s not my concern. We want to confirm we are able to grow and provide users with the best dating app.”
Closing on the topic of challengers, Marie Cosnard, Happn’s head of communications and trends, added: “We really feel the concept really puts us in another league. You could count rivals on two hands, Tinder and so on. We don’t really look at the competition – we’re not afraid of them.”