Yelp, the Web site offering user-generated reviews of bars, restaurants and other places, has raised $10 million in venture capital from Benchmark Capital.
We recently mentioned Yelp’s wave-making with its parties.
Yelp, like other recent Internet companies, is challenging incumbent sites like Citysearch by developing a community of local reviewers. By encouraging loyalist users to review often, Yelp bets its site will be fresher and more compelling.
It is noteworthy that the venture money comes from Peter Fenton at Benchmark. We recently featured Fenton’s argument that companies should only get funding after they’ve achieved some traction with customers. Yelp had 1.5 million unique users in September, a 200 percent increase from January, the company says. So it fits in the “post-adoption” category, Fenton told us today.
Fenton will join Yelp’s board.
After launching initially in SF, the SF-based Yelp has since launched in Boston, Chicago, Los Angeles, New York, San Jose and Seattle.
Yelp’s other investors include Bessemer Venture Partners and PayPal Co-Founder Max Levchin.
Rather than unleashing armies of people to go out and build a massive repository of reviews, like Citysearch did, Yelp has managed to build a local community that keeps reviews fresh, giving Yelp a more lively feel, says Fenton. And with more reviews, you can begin to parse them in different ways — for example classifying them to show which one are written by 20-year-olds, and which ones by 40-year-olds. That way, users can judge reviews based on their preferences.
Fenton said he made the decision to invest after talking with several locales, including Quince, a restaurant in San Francisco. He asked the waitress if she’d heard of Yelp. “Have I heard of Yelp?,” she asked. “I obsess about Yelp.” Fenton said she described in detail a negative review, and remembered the date the customer visited, and what went wrong that evening.
Fenton says $14 billion is spent each year on yellow page advertising every year in the U.S., and that he Yelp can make money by getting advertising on its sites from local establishments. Yelp is not yet making money.
The company had raised $6 million previously.
When asked about the girl-kissing-girl photos appearing from a recent Yelp party, chief executive Jeremy Stoppelman said the actions weren’t staged, and that the photographs underscore the “festivities and celebration and excitement going on in the valley” right now. The parties help to drive Yelp’s community building, he said.
Besides Citysearch and Yahoo Local, there are also new competitors like Judy’s Book and Insider Pages. Stoppelman said that the relative depth of Yelp’s community is what encouraged Benchmark to invest.
4 Comments
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Patti Neumann said:
CITYPEEK.com takes a peek at the best in a city. More community sites with reliable information are needed out there. Great. Always looking for new content.
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Kevin at TasteTV.com said:
We love Yelp1, and think the did a fantastic job with their concept. We hope to see a version of this taking place with TasteTV, along with key partnerships
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smartone said:
why would a local business advertise on Yelp if there are negative reviews about the business on the site?
This is a question that UGR sites have not answered yet
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raccrolliro said:
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5 Trackbacks
8:36 am
VentureBeat Wire » Local review site Yelp raises $10M said:
[...] See our story here. VentureBeat Community [...]
9:09 pm
Howard Lindzon » Windzon Weally Woves Widgets - Now We have a Widgetslab at the Blogging Times. said:
[...] One of my favorite widgets/companies Yelp just raised $10 million from Benchmark. With $16 million raised and a great engine and style, I like their chances. There are many partnerships to be had that will bring revenue for this cool, useful service. [...]
11:11 pm
Matt Cutts: Gadgets, Google, and SEO » Wired-Tired-Expired said:
[...] Very savvy, Yelp. Notice that they even geotargeted the ad to the Bay Area to get laser-targeted leads. Somebody’s putting that new funding to good use. [...]
9:25 pm
Crazy Guide to the Internet » Blog Archive » Rumor: Yelp Raising a $30M Round of Funding said:
[...] has previously upraised digit rounds: between $3-8 meg from inventor Ventures in Nov of 2005 and $10 meg in Oct of 2006 in a ammo advance by Benchmark [...]
1:44 pm
» Yelp: $200M valuation, $31M total funding, 8M uniuqes, SEO – all for local reviews Web 2.0 Money: The Money & Business Behind the Web 2.0 Innovations said:
[...] http://venturebeat.com/2006/10/04/local-review-site-yelp-raises-10-million-from-benchmark/ [...]