Grindr, the dating app that focuses on the LGBTQ+ community, has agreed to go public by merging with a SPAC at a valuation of $2.1 billion, including debt.
It’s the largest SPAC deal announced in more than three months, a rare multibillion-dollar move in an eleven red-hot market that’s gone cold due to regulatory scrutiny, investor skepticism and a growing track record of underperformance. There were just 16 blank-check mergers in the first quarter of the year, per Refinitiv, after 213 such deals were done in 2022. The IPOX SPAC Index, meanwhile, which measures SPAC performance, is down more than 20% this year.
But Grindr thinks it can buck the trend: Unlike many companies in more speculative industries that have tapped the SPAC market, it already has a firmly established business, with $147 million in revenue and $77 million in EBITDA in 2021—up 30% and 51% from the year prior, respectively.
Grindr, which was founded in 2009 and is based in Los Angeles, has courted controversy in recent years. In 2020, Chinese gaming company Kunlun sold the company under pressure from the Committee on Foreign Investment in the US, after multiple senators had raised concerns about how Kunlun would protect user data from the Chinese government. Late last year, Grindr was fined about $7 million by Norway’s data privacy watchdog for sending personal data to potential advertisers without user consent.
And earlier this month, the Wall Street Journal reported that data on the physical movements of millions of Grindr users had been made for sale in recent years. Grindr changed its privacy practices in 2020 to eliminate the sale of location data to advertisers, but the report indicated that previously collected information had remained on the market.
Grindr will also have to overcome the precedent of Bumble, a fellow dating app that went public last year amid much fanfare. Bumble—also the owner of Badoo, which has a wider non-US market—closed its first day of trading in Feb. 2021 at $76 per share. Today, it’s trading at less than $19 per share, marking a decline of more than 75%. In November, Bumble reported that its number of paying users had declined for the first time.
With about 11 million monthly active users, Grindr is the smallest company in that cohort. Bumble and Badoo averaged about 40 million monthly users last year, while Match claims around 100 million across its portfolio.
One man who seems quite confident in Grindr’s future is Raymond Zage, the chairman and CEO of Tiga Acquisition, the SPAC with which the company plans to merge. Two years ago, his firm Tiga Investments was part of the group that bought Grindr from Kunlun for $620 million, with Reuters reporting that Tiga took a 41% stake. That puts Zage—who previously led Farallon Capital Management’s efforts in Asia—on both sides of this week’s deal.
Grindr estimates it will raise $384 million in equity through the merger, including $284 million Tiga Acquisition has held in a trust since going public in November 2020, at the height of the SPAC boom. None of the funding will come from a PIPE deal.