Boy meets girl, falls in love, settles down and lives happily ever after - it’s a tale as old as time, but this is 2018 and the wide, wide world of the internet has forever changed the way in which we meet partners, flirt, date and find true love.
As more and more people turn to online dating, there are “enormous” money-making opportunities out there for savvy entrepreneurs, says Victor Anthony, managing director of internet and media at Aegis Capital.
"Just look at the market cap of [American dating leader] Match Group. It's now at $12 billion. That tells you a lot in itself," he tells The National.
“The stigma that you saw years ago is eroding as younger generations become more mobile focused and internet penetration rates increase,” he adds. “So there is enormous growth potential in this space. Players with scale will continue to dominate the market, but there are also opportunities for niche operators to compete as well.”
One such niche operator is Muzmatch, a dating app for Muslims based in Aldgate, central London. The company was set up four years ago by Shahzad Younas, 33, a former investment banker at Morgan Stanley, and software engineer Ryan Brodie, 24, with the aim of helping young professional Muslims find partners within the community.
"We want to be a global Muslim-focused consumer company," Mr Younas tells The National. "We're already in 215 countries, and will grow further. There are 1.8 billion Muslims in the world, so it's a huge consumer market."
It is backed by Hambro Perks, a venture firm co-founded by City veteran Rupert Hambro and former investment banker Dominic Perks, which backs British businesses with global ambitions. Other high-profile investors include Y Combinator and FJ Labs.
In January, Muzmatch raised £1.5 million (Dh7.8m) worth of seed funding to help it grow the team and expand internationally.
Ali Qaiser, director and head of Middle East at Hambro Perks, says that his firm chose to back Muzmatch due to its unique business model and its focus on building a genuine consumer brand for the Muslim market.
"Muzmatch empowers young Muslims to meet other singles with a view to settling down," Mr Qaiser tells The National. "The key differentiator from similar apps targeted at Muslims is the focus on marriage rather than dating.
“The app has been in monetisation phase since March 2017, and has an impressive growth trajectory with revenue-generating users in a short period of time.”
Mr Younas, himself a Muslim, decided to launch the app as a solution to the problem he saw facing many young Muslims who are unable to find a partner.
“For Muslims, a big part of the culture is marriage,” he says. “There’s a lot of pressure to settle down. But I saw that many people, especially in professional circles like lawyers, bankers and doctors, were finding it hard to find that special someone.
“Most of the existing dating apps were old-fashioned and awkward. I thought to myself, if we can create a modern, efficient app that taps into the new generation, who have money and are tech-savvy, it could be really big. So I quit my job in 2014 and set up Muzmatch.”
Over 10,000 people around the world have successfully found partners through the app, including a couple in Uganda. “It turns out they were the only two people on our platform in Uganda,” Mr Brodie says. “When it’s meant to be, it’s meant to be.”
The app combines new technology with traditional Muslim values. For instance, users have an option to add a chaperone, and you can blur out your pictures to protect your privacy.
Joining is free, but users can opt for a premium subscription which costs £19.99 and gets you unlimited swipes, a host of extra search preferences and a VIP badge to help you find your match faster.
Mr Younas says the company has been profitable for over a year. “We’re growing faster than ever now,” he says. “Our goal is to hit 1 million users within the next 12 months, if not sooner. I think that’s absolutely achievable.”
Other dating apps have also spotted a gap in the market, and successfully built a user base around that.
The swanky Inner Circle targets young, attractive, well-educated singletons who are fed up of endless swiping on mass-market apps such as Tinder. People are carefully vetted before being allowed to join, and around half are rejected, says co-founder David Vermeulen
"Our biggest USP is that we go for quality instead of quantity," he tells The National. "Many people are 'Tinder tired' and are looking for a more meaningful experience, with like-minded young professionals."
The app launched in Amsterdam in 2013 and has quickly spread across the world, including to New York, Los Angeles, Dubai, London and Paris.
It has 900,000 users at present, far less than the tens of millions who use apps such as Tinder, but that’s the whole point, Mr Vermeulen says. “We’re a totally different business, an elite community. At the same time, we have the critical mass you need to operate.”
Inner Circle makes money through subscription fees, which range between £20 and £40 per month. It also hosts a series of exclusive events throughout the year, such as a polo event last summer in London, where tickets cost around £35.
Mr Vermeulen says the company has been profitable for a number of years. “We’re pretty lean and mean, we only have around 12 staff,” he says. “Last year we grew 300 per cent in terms of revenue and also Ebitda.”
He adds that the firm hasn't had to take in any investment, as he funded the company himself.
While the subscription cost is higher than on many dating apps, Mr Vermeulen says most users quickly see the value. “People are prepared to pay for quality. It sounds cheesy, but £20 to find true love is a bargain,” he argues. “We’re talking about five coffees at Starbucks.”
On the opposite end of the spectrum, you have Happn, a dating app with 47 million users around the world.
Launched in Paris in 2014, it allows people to see who they have crossed paths with in real life, for example during their daily commute. It currently operates across 40 countries, with its biggest markets in Europe, India, Turkey and South America. It also has around 200,000 users in the UAE.
"We are not addressing a niche, but potentially every single urban inhabitant in the world," Didier Rappaport, CEO and founder of Happn, tells The National. The company has already raised €30m [Dh135.8m] in three funding rounds, with the cash going towards expansion.
Mr Rappaport describes the business as a “freemium model”. The app was free of charge at the start, but paid subscription was introduced around six months ago in order to drive profitability. Users can also buy packs of credits, which enable certain in-app features.
Becoming a subscriber will set you back between €5 and €20 per month, depending on each country. Mr Rappaport won’t disclose the number of paying subscribers on the platform, but he says the company is profitable, despite huge marketing efforts.
Advertising is another source of revenue, contributing around 10 to 15 per cent to Happn’s topline.
The French businessman warns that the online dating market can be very cutthroat, thanks to stiff competition.
“The sector is very crowded, there are a lot of competitors,” he says. “You need to be competitive and aggressive to succeed and become global, and to convert enough users into paying users.”
Stanford professor Paul Oyer, who wrote a book entitled Everything I Ever Needed to Know About Economics I Learned from Online Dating, agrees that it's not an easy sector in which to succeed.
"The problem is too much competition, it's too easy to create these sites, the barriers to entry are not as high as we might have thought," Professor Oyer tells The National.
“There’s another challenge in the business model, which is that, unlike with a platform like Facebook, if an online dating site is successful, the customer leaves! That’s a big issue.”
Nicholas Hyett, equity analyst at Hargreaves Lansdown, warns that in a downturn, the first thing people might cut is their subscription to dating apps.
“Obviously the more premium the product, the more sensitive it is in a market downturn,” he says. “Also, advertising budgets are heavily market dependent, so if you’re basing your revenue model on getting advertisers in, that could be a challenge in a downturn.”
For now, however, there is no doubt the market is booming. Market research group Mintel expects the sector expected to be worth £225m to the UK economy by 2019, while in the United States, the sector churns out around $3bn per year in revenue, according to IBIS World.
“The market is only going to continue growing,” Mr Anthony says. “If you look back two decades ago, almost no one used online dating to meet potential partners, but fast forward to today, roughly 30 per cent of all couples have met online,” he says. “That will go to 50 per cent by the end of this decade.”
Mr Anthony draws parallels to how e-commerce developed, and how Amazon became the dominant player in that space. “People are shifting their consumption online, in all walks of life,” he says. “Online dating is convenient, it’s relatively economical and you have a wide selection, depending on which app you use.”
“You may see some consolidation in this sector, as scale is key but there’s no doubt that this is where the world is going.”