Neal's Deals (Vol. 15)

Hey everyone - last week the most popular dating app for paying users, Bumble, acquired another company in the same ecosystem called Official. To the surprise of many, Official is actually not another dating app but is rather meant to build stronger relationships for couples through check-ins and date planning. This acquisition is particularly interesting as it sheds light on two issues Bumble is facing. First, there is heightened competition from niche dating apps eating into their market share. The second is that Bumble needs to address the great paradox of their industry in that one of the biggest risks to their business is their success.

Just think about it, as dating apps successfully match new couples they lose engaged (sometimes) paying customers. That is one of the reasons why Bumble is trying to provide offerings further up the relationship services value chain. Another reason is because of the hundreds of new apps grabbing the attention of singles, which has created an extremely fragmented market with a long tail of small players.??

Just take a look at this chart and you will understand what I mean.?

As of this past fall, over half of the dating app market share is controlled by smaller players. These competitors often better cater to the specific preferences of each individual given their hyper-focus on unique categories. For context, here are some examples of the dating app categories available today:?

Religious: Christian Mingle, Muzz and JSwipe??

Ethnic: BLK, Chispa and Aisle?

LGBTQ+: HER, Scruff and Tser

Upscale and exclusive: The League, Raya and Luxy?

Others: double dating app for singles, matchmaking app to set up single friends and an app for serious relationships only

The point being, Bumble may be feeling that its top of funnel is threatened, and understandably so. Its stock is down nearly 80% since its IPO in 2021, and has been doing what they can to expand offerings and attract new users. The company even made another acquisition this week by purchasing a French GenZ dating app called Fruitz to gain more traction with a younger audience in Europe. It is important to call out that these struggles are not exclusive to Bumble but almost all large players in the space. Match Group, which owns Tinder, Hinge, OkCupid, and many other well-known dating apps, is also struggling to meet expectations and consequently, its stock is also down almost 80% since all-time highs.?

Nevertheless, I expect there to be no slowdown of dating apps coming to market given the integral role they now play in shaping our society. According to a study from the Pew Research Center, one in ten partnered US adults met their significant other through a dating site or an app. This number is only expected to grow given the shift in dating norms. Even today, half of US adults under the age of 30 have used a dating app and that number is likely even higher amongst GenZers.?

From an investor's standpoint, it is very challenging to disseminate where value will accrue in this market. Larger players are seemingly acquiring smaller competitors as a lifeline to expand services or increase usage amongst certain demographics. This space will likely become increasingly fragmented with new companies better catering to the specific tastes and dating preferences of users. For that reason, future outcomes may be much smaller than the precedent set by the first movers.??

What is more certain, however, is that one of the most important decisions anyone can make is who they want as a life partner so choose your dating apps accordingly.

For now, let’s get to it:??

Plenty, a San Francisco-based financial management platform for couples raised $2.75 million in pre-seed funding led by Phenomenal Ventures.

Why this is interesting: On the topic of relationships, about a third of adults with partners report that money is a big source of conflict. Why? Because money involves anxieties about control, debt, kids, and big-ticket purchases. That is why Plenty helps couples discuss, manage and invest their money together through enabling connected accounts that encourage transparency and goal setting. There are many other couples-focused investing apps like Honeydue, Zeta and Ivella so I am skeptical that their product will provide enough differentiation to succeed in the long term. Regardless, @Bumble take notice of Plenty because this could be another path to expand up the value chain.?

Sixfold, a New York-based generative A.I. tool for insurance underwriters raised $6.5 million in seed funding led by Bessemer Venture Partners.?

Why this is interesting: Insurance underwriters have a very tedious job in determining whether an insurer can provide coverage to individuals, businesses or families. Their responsibilities include evaluating applications and sifting through hundreds of documents and 3rd parties sources to come up with a decision. Now with Sixfold, many of the underwriting workflows across data collection, industry research, risk analysis, and decision logging can all be automated with a few clicks. It will be interesting to see the accuracy levels Sixfold's insurance coverage decision-making. Either way, its research and organizational benefits alone will seemingly make an underwriter's job much easier. You know what they say (at least in Neal’s Deals), another week, another industry being disrupted by AI.?

Manifest Cyber, a Westport, CT based startup that allows companies to generate, collect, and monitor their software bill of materials (SBOM) raised a $6 million seed round led by First Round Capital.?

Why this is interesting: Other than Manifest being based out of the area I grew up in, it is addressing the fact that businesses, especially government organizations, can no longer afford to blindly build and consume software without tracking its contents. That is why President Biden signed an executive order two weeks ago to improve cybersecurity standards in the country’s private and public sectors. The need to better monitor and vet software is as acute as ever, which helped Manifest sign two new contracts with the US government in parallel to their fundraising. The company was also founded by two entrepreneurs with prior experiences at the Pentagon and Palantir so they know this space better than anyone else. This gives me some confidence that they have unique distribution channels to forgo some of the lengthy government sales cycles they otherwise would have faced.?

Deals in the Works:?If you want to learn more - feel free to reach out

1. Live music production studio software that helps all stakeholders schedule sessions, manage documents, and provide real time updates
2. AI wealth advisor
3. Toilet sensor that can assess all aspects of molecular composition to diagnose and prevent diseases
4. Data insights solution for Mining and Oil & Gas companies
5. AI tool that connects your browser to ChatGPT or any Large Language Model to actions upon tasks. Examples include restaurant bookings, flight bookings, scheduling, emailing, tweeting..etc

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Quote of the week:

As we express our gratitude, we must never forget that the highest appreciation is not to utter words but to live by them.

- John F. Kennedy?????????????

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Have a great Memorial Day Weekend everyone!!!!