Rock star Bono’s venture-capital firm Elevation has agreed to make a US$125-million investment in Yelp, a firm specialising in local search whose technology has taken root in major metros across the US, Canada, UK and Ireland.
Elevation will make the initial US$25-million investment in Yelp through the purchase of Series E preferred stock.
Elevation Partners will also seek to increase its total investment in Yelp to $100 million through a planned purchase of shares from vested employees and other eligible shareholders. The details of the offer to purchase are expected to be announced to qualified participants in the near future.
“We have been able to grow and scale our business quickly, even in the tough economic environment of the last year – a clear indicator that we’ve only begun to realise the potential of local search,” said Jeremy Stoppelman, Yelp chief executive officer and co-founder.
“This investment in Yelp provides us with even more capital to focus on scaling our already proven business model and we are thrilled to have Elevation as a new partner.”
In 2006, Bono became one of six managing directors of the US$1-billion Silicon Valley-based venture-capital fund, Elevation Partners, which will focus on opportunities in new media and entertainment.
"We believe Yelp is revolutionising how consumers discover local businesses,” said Marc Bodnick, Elevation Partners managing director and co-founder.
“Yelp has visionary leadership and a massive business opportunity ahead and we are excited about participating in Yelp’s growth,” Bodnick said.
How Yelp will use funding
Yelp plans to use the additional funding to deepen its market leadership position throughout the US, accelerate growth in Canada and throughout Western Europe, and continue the development of innovative mobile applications.
The company experienced rapid growth in 2009, with the activation of eight new US markets, launches in the UK and Ireland, and the introduction of four new mobile applications (iPhone, BlackBerry, Palm Pre and Android).
Traffic on the site increased to more than 26 million unique visitors in the month of December 2009 and review content doubled in the last year to more than 9 million reviews.
Yelp earns revenues from search and display advertising and also offers free tools for local businesses to market to the Yelp consumer community.
As a result of the investment, Bodnick will join Yelp’s board of directors upon the closing of the transaction.
By John Kennedy
Photo: U2 frontman Bono