It’s not often that I can say I was right, but I feel can do it this time. Six weeks ago, I wrote (about dating service Coffee Meets Bagel):
CMB received $2.8M in venture capital last May, which would not cover its marketing budget for this next year. Yet, its is only asking for 500K from Shark Tank. This leads me to believe CMB is mainly on Shark Tank for the PR and don’t want to give up very much equity, has another round coming, or does not intend to go with its stated marketing plan at all – it would not have the money for it. If it needs to grow massively to become profitable, CMB has no other option than to take the buyout offer.
And so it turns out CMB 1) indeed needed the money despite raising 2.8M eight months ago, 2) didn’t want to give up much equity to get it 3) because they had another round coming 4) to fuel marketing.
In other words, good PR boost. I do think it is odd to raise so much more money so recently after the venture round. CMB must have started looking for more money just 3-4 months after that round. This also suggests that the investors believe the product has hit the right mix of stickiness (if people come on – they will stay, and thus funds are needed to accelerate users into the app).
On Feb 18:
Dating App Coffee Meets Bagel Lands $7.8 Million In Series A
Coffee Meets Bagel, the dating service that focuses on quality over quantity, has today announced the close of a $7.8 million Series A financing round led by existing investor DCM Ventures. Quest Ventures and Azure Capital also participated in the round.