Smalltown, a small local site, acquires tinier Local2Me

October 14, 2007 | Dan Kaplan | Comments |

smalltown.jpgDespite the meltdown and slow death of a local community news site BackFence, the local market continues to draw interest.

Last week, the hyperlocal news and blog site, Outside.in, raised a $1.5 million second round of funding and a month ago, American Towns raised $3.3 million. Yahoo and Google, despite offering more sophisticated local results, haven’t yet created vibrant communities. Yelp, another locale listing site, hasn’t sewn up the market either.

Today, Smalltown, a site that helps small businesses in a few Bay Area towns create a presence on the web, said it has acquired a small site called Local2Me for an undisclosed amount. Local2Me has been around since 2000 and is essentially a Yahoo! Answers for small communities in the Bay Area. People ask questions — mostly about local businesses — and neighbors offer advice, free of charge. At around 8,000 active users, Local2Me is tiny, but this small, dedicated user base has produced a fair amount of content that fits in with Smalltown’s focus on local merchants.

The deal’s scale was also tiny, and may be indicative of the slow pace at which the hyperlocal market seems to move. It’s not yet clear how these companies will generate the kind of returns that venture capitalists tend to expect.

Smalltown is based in San Mateo, and last year raised $3 million from Formative Ventures.

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Photo of Dan Kaplan

About the Author, Dan Kaplan

Once upon a time, Dan considered himself a magazine journalist with dreams of "The New Yorker" and a couple of well-reviewed but only mildly successful books. Then one day, life, as it is known to do, decided it was time for rebirth. Like so many things before it, this rebirth was conceived on a mostly-empty plane to Reno. Now, instead of magazine writing, Dan would plunge into the world of New Media and write for Matt Marshall's blog.

It's funny how it goes.

  • The World Wide Web has seductive efficiencies of scale. For example, build a website for selling books, and the whole free world is your customer base. But this business model just doesn’t work for “local” which requires “feet on the street” and a true local presence in every region and patience. True, Smalltown is “tiny” now relative to most Internet investments, but that is because we have intentionally limited our growth and kept our burn rate low until we have the formulas for success totally figured out and proven in one region. Then, KABOOM, there will be Smalltown sites everywhere. Our investors have the foresight and patience to see it’s going to take a little longer for Smalltown to own this space, but it’s worth the wait because it’s a very large opportunity. Our acquisition of Local2Me will accelerate our process because it will help us build a paradigm of how genuinely useful, informative and profitable a Smalltown site is once it has been embraced by a community. The KABOOM is coming soon ;-)

    Check out our press release that has more information: http://www.smalltown.com/pressrelease_20071015....

    Learn more about Smalltown's unique approach to winning the "local" space here: http://blog.smalltown.com/

    Watch our new video about Smalltown here: http://www.smalltown.com/theater_smalltown.html
  • Check out our press release that has more information: http://www.smalltown.com/pressrelease_20071015....

    Learn more about Smalltown’s unique approach to winning the “local” space here: http://blog.smalltown.com/

    Watch our new video about Smalltown here: http://www.smalltown.com/theater_smalltown.html
  • The World Wide Web has seductive efficiencies of scale. For example, build a website for selling books, and the whole free world is your customer base. But this business model just doesn’t work for “local” which requires “feet on the street” and a true local presence in every region and patience. True, Smalltown is “tiny” now relative to most Internet investments, but that is because we have intentionally limited our growth and kept our burn rate low until we have the formulas for success totally figured out and proven in one region. Then, KABOOM, there will be Smalltown sites everywhere. Our investors have the foresight and patience to see it’s going to take a little longer for Smalltown to own this space, but it’s worth the wait because it’s a very large opportunity. Our acquisition of Local2Me will accelerate our process because it will help us build a paradigm of how genuinely useful, informative and profitable a Smalltown site is once it has been embraced by a community. The KABOOM is coming soon ;-)