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How much did TrustedPlaces sell for? And does Qype now have a problem?

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So since TrustedPlaces announced its acquisition by Yell we’ve been digging around to try and find out the purchase price.

Understandably, we respect the fact that co-founder Sokratis Papafloratos doesn’t want to say, and Yell certainly won’t. But this information would be very useful to startups out there wondering what the purchase price is these days for a company like this. So the story basically goes like this.

TrustedPlaces went through a lot in the last few years, including the departure of co-founder and COO Walid Al Saqqaf. To all intents and purposes Papafloratos was left running the site on his own with an outsourced team of developers for the last 18 months.

When I saw him last last year he told me “It’s been quite a year – the toughest and best since we started.”

The first 4/5 months of 2008 were “bad”, the ad market was collapsing and when they went out to look for extra funding (or maybe an exit) in 2008 it was the wrong time and they changed their minds.

But we understand that since July 2009 TrustedPlaces went profitable, and was able to sustain a development team in Tel Aviv, with Papafloratos in London and two interns (one of whom was an ex-banker from Lehman Brothers in fact).

At the start of the year they had a second wind with revenue streams kicking in. Advertising on the site was up, they had a partnership with DMGT with their Local People product (a white label service), and there was transactional revenue coming in from JustEat, Booking.com, BookingBug and TopTable.

It appeared that Qype and TrustedPlaces (by dint of being around so long) were the best known local reviews sites certainly in London, if not the rest of the UK. Things were looking up.

However, we know that for the last 6 to 9 months they were also looking for either more funding or an outright acquisition.

Therefore, we’ve heard from separate sources that the sale was in the “low millions, eg £2-5M”. Another source says “£1m to £2m”.

So we’re going with a £2m sale price to Yell, and probably in cash, though we can’t confirm that.

TrustedPlaces had a Seed/Angel round in 2007 of £500,000 from HowZat Media.

So all in all not a stunning exit. But probably the right one for the founder and the investors.

But that leaves Qype, effectively Europe’s Yelp.

Since Yell, which is on the ropes anyway, now has a local reviews and recommendation platform, where does that leave Qype?

So far it’s been rumoured to have talked to Nokia. Qype is keeping schtum and despite some chatter earlier in the year we’ve heard nothing since. Founder Stephan Uhrenbacher is now Chairman and busily being an Angel investor in green startups in Germany.

Yahoo!, which is also poised to sign a deal with Nokia, has its own local reviews product, Yahoo Local. It doesn’t need another one, and likely as not Yahoo Local will end up integrated into Nokia handsets. There is no incentive for Nokia to do this with another third party, especially a small one.

So, what next for Qype if Nokia and Yell are no longer in the market for a local reviews site? Who on earth can they exit to? Tell us your theories below.

  • http://davecstone.com Dave Stone

    This issue goes back further… remember WeLoveLocal selling to GCap?

    • kell

      Well. the main yelp has some problems too, and its rooted back to its fragmented framework.

      • Euro PE Investor

        If Yell was able to purchase trustedplaces for £2-5 million or less, then Mark Canon is a genius dealmaker.

        It would have cost him at least 20 times that amount to buy Qype, and Yell is now able to graft trustedplaces onto its existing platform and create something even more powerful than Yelp or Qype. the synergies are obvious.

        This is brilliant corporate M&A and will probably go down as one of the best deals of all time.

      • Jack Cameron

        + 1

        Agreed. If he bought this for £2-5 million, that is the deal of the century.

        Most European corporate buyers are pretty dumb, but it looks like Yell has the right guy in seat for its acquisitions operations.

  • http://livz.org Steven Livingstone

    It’s one of these where you wonder whether not taking investment and ploughing on and then exiting at around the £2m mark would be pretty solid.

    Still, maybe investment was essential for him – don’t know the detailed story.

    With 1m investment i’m not sure how much of the exit you’d see given – proportional to the effort it sounds like he had to put in.

  • http://www.bview.co.uk Colin Bruce

    So Google were looking at Yelp but Yelp backed out. So why not Google?

    Probably because i) Yelp is making good sales with SMEs in the US and Qype is not there and; ii) Yelp is based in Google’s back yard which always makes a purchase easier.

    Here’s a radical thought: they stay independent and/or float.

    The other idea is that a super roll-up happens in the local listing sector but this is probably harder to achieve than in other sectors such as dating as the economies of scale are not as clear.

  • http://CrucialDivide.com David Ashwood

    The article mentioned 500k GBP funding but Cunchbase puts it at 1M USD?

    Aren’t there a plethora of services in this space now? Might have an impact on whatever the actual selling price was.

  • http://loco2travel.com Jamie

    What if they just cash in their remaining chips and sell all their content and user-base to Yelp?

    Selfishly, that would make my job as someone developing against their APIs easier (because I don’t have to then make a judgement call on whether Yelp is going to start gaining marketshare in Europe and I can just get all the content through one API).

  • Mat

    In fact Nokia just announced the new version of Ovi Maps will use Qype so there must be some sort of deal there – http://blog.ovi.com/2010/05/20/new-ovi-maps-faster-better-personal/

  • http://www.myeggnoodles.com Chris

    Your taking a wild guess at the figure? Great journalism Mike.

    • http://francoisderbaix.com/ françois derbaix

      For me, as a reader, a wild guess is way better than nothing.

  • Jeremy Baines
  • Joerg

    Qype is one of the most interesting start-ups around and has successfully managed to operate in several European countries.
    No matter what happens they operate in a huge market (yellow pages) and they have the community and the content. This story will be a success story – maybe with an exit, maybe as a profitable company.

  • Rahul Dighe

    Well Qype should be happy Yell are going to most likely just sit on it and not do anything innovative …

    • Paul Oppenheimer

      The problem with Yell is that its legacy history … first part of the post office, and then BT.

      Suffice it to say, entrepreneurialism and risk taking is not in the DNA of most of its employees.

      An acquisition like this at a low price is a great way to get fresh minds and talent into the system. I think it is a great acquisition, and Yell needs to be doing a lot more of these types of acquisitions to bring in true entrepreneurs who have shown that they can make things happen quickly with limited resources.

  • http://www.pinnycohen.com/ P Cohen

    I think this could be a blessing in disguise for Qype. It will take forever for Yell to integrate Trusted Places.

    I personally think that guys like Yelp, Foursquare, Qype etc. should focus on growth to IPO, but if i were to hazard a guess around exit i would say – i) One of the big mobile guys (AT&T, 02, Nokia, Tmob) ii) Big search engine (Yahoo, Google) or iii) Big British or German media company.

  • oh dear
  • http://www.zoopla.co.uk Doug Monro

    Congrats to Sokratis and team and well done – but Qype is in a different traffic, community and ad revenue league (especially across Europe) from TrustedPlaces. Local plus mobile is hot right now so I would not discount a big money exit for Qype at some point – as well as the likes of Google or Nokia, there are plenty of big media businesses / yellow pages in Germany, UK, EU and beyond that would love to get a foot in this space; or even Yell in a year or two!

  • Chee Ho Wan

    Yell probably couldn’t afford Qype so had to go a cheaper version. I can’t see someone like Google entering into the reviews space as they would probably choke the revenue’s they can make otherwise through adsense.

  • http://www.spirofrog.de Thomas

    Qype is one of the most interesting start-ups around and has successfully managed to operate in several European countries.

    Nope IMHO!

    – But how much money they ” burned” so far???

    They lost 2.3 Mio. € in 2007
    and 4.3 Mio €uro in 2008 respectively

    Long way to go for profits….

  • http://www.spirofrog.de Thomas
  • http://www.beringertame.com Patrick

    Once a start up ceases to be a start up and the passion/zeal/spirit of the founding team is removed and the product absorbed into a corporate portfolio, there is a danger that the brand will decline. This is particularly true with something like Trusted Places which relies on a sense of community to get people to interact with it. Whilst this MIGHT not be the case with Trusted Places, I’d see their exit as Qype’s opportunity to take a more dominant position and increase market share, they’ve got a very strong management team and I’d expect them to go very much further than Trusted Places.

  • John

    Qype is just awful and is a poor substitute to Yelp. Their German site which I assume to be their largest has virtually no reviews at all. Maybe once more Germans get themselves capable phones and those phones don’t need charging throughout the day the European market might be worth going after. But Yelp, especially in California, is soooo much better.

  • http://www.miramus.com Katie Lee

    Ooh, let’s all just make some wild stabs in the dark! Journalism by committee! Fun!

  • Teena

    I don’t like companies who are just founded for à good exit

    Companies should Be founded to Love à Business

  • M Reynolds

    I’d be very surprised if Yell paid anywhere near what people are speculating. If they did, those that say its the deal of the century are retarded and I certainly wouldn’t want them managing my M&A activity.

    If the figure becomes public, it will be in the top end of 6 figures and no more.
    TrustedPlaces failed to build any sustainable revenue in 5 years, their EBIT was horrible and from what I heard, the founder/s were desperate for cash for many months.
    So this is a good end game for both.
    Sokratis gets paid something for his hard work over the last few years and Yell get UGC/reviews & a community.

    I bet Yell fuck this up, kill the community and then start internal deliberation for months on how they can integrate reviews without pissing their paid customers off….

  • Marty

    Yes, the figures are probably lower. I recall Mike’s TC article of Sept ’08 after Qype announced it had secured an additional €8 million funding.

    Mike reported, “I have already had one of Qype’s local reviews competitors (for there are many) ask me “what do you think we should do?

    Now, when startups start asking journalists for advice, this is usually a bad sign. Flattering… but a bad sign.”

    However, I may be wrong and Yell have done an AOL ie. paid an obscene amount of money only to close it down after realising it hasn’t gained enough traction.

    Either way we should be congratulating Sokratis Papafloratos & Walid Al Saqqaf for their entrepreneurial spirit and hard work over the last 4 years.

  • http://netzwertig.com/2010/05/31/qype-gruender-stephan-uhrenbacher-im-interview-es-gab-gespraeche-mit-foursquare/ Qype-Gründer Stephan Uhrenbacher im Interview: “Es gab Gespräche mit Foursquare” » netzwertig.com

    […] Butcher von TechCrunch Europa fragte kürzlich in einem Beitrag, ob Qype ein Exit-Problem hätte… Dieses Problem sehe ich nicht. Es gab kaum eine Firma mit […]

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