Social travel site WAYN is allegedly in talks with AOL over a possible $200m sale to the consumer portal giant. A spokesperson for the UK startup denied that any sale talks are taking place. However, I have tonight spoken to three well-placed sources who have all independently quoted the $200m figure to me, and named AOL as the prospective buyer.
In a phone call tonight Anika Erskine, WAYN’s marketing manager, told me: “We are absolutely not for sale. We’re not considering it at the moment. We’re excited about what we’ve done and the partnerships we’ve signed. We’ve just launched a new version of our travel guides, with tonnes of content and new services. We’re very much pushing down that route – cutting edge mobile services, UK focused and rolling out across other countries.”
But the fact that no deal has been announced yet is put down by my sources to delicate negotiations around a generous earn-out clause proposed by the founders. And the signs are that this is proving to be a sticking point in negotiations. The site is only on course to bring in $4.5m of revenues this year, a figure which contrasts markedly with the exit price.
If the deal goes through it would rank amongst the biggest sales of a UK social networking startup yet, and a healthy payday for founders Jerome Touze (CEO), Peter Ward and CTO Mike Lines (who runs the 35-strong technical department in Poland). Last year US media giant CBS bought UK social music site Last.fm for $280m. WAYN is one of the fastest growing travel and lifestyle social networking community sites in the UK and has a footprint in over 220 countries, with over nine million members.
WAYN’s investors would also be pretty happy. In 2006 the site received $11m in funding, including money from Brent Hoberman, co-founder of budget travel website Lastminute.com. The round was led by DFJ Esprit, and other investors included Adrian Critchlow and Andy Phillipps, co-founders of Active Hotels; David Soskin, CEO, and Hugo Burge, co-founder of Cheapflights; Steve Pankhurst, co-founder of Friends Reunited; and Constant Tedder, co-founder of Jagex, which runs RuneScape, the UK’s largest online multi-player game. (Burge also runs HOWZAT Media, the investment fund which invested in TrustedPlaces). WAYN originally launched in 2002, but attracted a limited amount of interest until its funding round.
Traffic, after dipping mid-way last year, appears to have surged since the site took off subscription locks which had clearly acted on a block to growth. WAYN members create a profile, log their past, present and future trips, and can find other members based on location. They can set up shopping lists, upload photos, videos, email IM, and SMS. The site is strong amongst the 18 to 25 range.
But sources I spoke to in the investment community aren’t leaping for joy at the rumour. One source told me they “wouldn’t be very happy” if this deal went through on the basis that the site was a “me too” and “not very sticky”. Although established early in 2002, WAYN does resemble a number of similar social networks around travel, among them the US-based RealTravel.
Some might say lead investor DFJ Esprit is keen to realise its investment sooner rather than later. Key partner there Nic Brisbourne blogged in October last year that WAYN would most likely be sold to a big company which wanted to enter a vertical sector like travel:
“…the margin between overpaying today and missing the next big thing is razor thin. This puts big companies in a very difficult place – and some will respond by moving more aggressively to acquire companies earlier and/or at higher valuations. The same valuation/acquisition logic that applies for Microsoft and Facebook applies for acquirers and internet companies for whom exits in the hundreds of millions of dollars are a big deal – particularly in specific verticals like music and travel. CBS acquired LastFM at lofty multiples for this reason and the same thinking was behind our exit analysis when we invested in WAYN.”
Any acquirer of WAYN will be looking to capitalise on existing growth and WAYN has signed a number of deals in the last year in order to power this. Among them was a deal with affiliate marketing network Buy.at to allow users to make money through their profiles by displaying products they want to recommend to friends, thus earning a commission.