Only in adult online services sites can you find massive, profitable, fast-growing companies that are shunned by venture capitalists. Adultfriendfinder is a case in point (and one that came up in a recent conversation with the ever-interesting Markus), with a subscriber base, traffic, and revenue model better than Facebook.
Consider that Adultfriendfinder — tops in revenue among the 40 sites run by Conru under the holding company Various — claims 25 million active users, an undisclosed percentage of whom pay up to $50 a month for its services. The Web-measurement service Alexa ranks the site as the 58th most popular site on the Web.
In comparison, the social networking site Facebook, reportedly for sale for roughly $1 billion, has about 9.5 million registered users who pay nothing. Its Alexa rating: 56.
The trouble is, most VCs are squeamish about this stuff, with it being not uncommon for there to be “no-sin” clause in their investment agreements with limited partners. The result, however, is that profitable, fast-growing legal businesses are off the radar of your typical venture investor, and Adultfriendfinder is just a particularly extreme example.
Of course, it’s worth pointing out that AFF doesn’t need VCs’ money. It’s doing just fine, thanks very much, with more 25-million active users, a percentage of which pay up to $50/month to skulk about looking for, you know, offline adult action. Then again, the founder seemingly would like to somehow exit, and with no investors, few acquirers, and no IPO prospects, he is “stuck” in profitable prosperity.