It was only last month that Yelp was almost Googled. The local reviews site came a breath away from inking a $500m deal to sell itself to Google, but for reasons still unknown, the deal ultimately fell apart.
The company, it seems, is not looking back. Today Yelp announced an investment of up to $100m from Elevation Partners, the private equity firm that counts U2 frontman Bono among its directors.
Elevation is making a $25m direct investment in Yelp stock, and Elevation partner Marc Bodnick will take a seat on Yelp’s board. Elevation will try to increase its total investment in Yelp by purchasing an additional $75m of shares from vested employees and other shareholders.
If that sounds like a strangely familiar way to invest in a Silicon Valley tech company, it’s because that’s how Digital Sky Technologies structured its investments in Facebook — a $200m direct investment and another $100m for employees — and Zynga — leading a $180m round.
Though DST had no involvement in the Yelp deal, its influence is clearly being felt around the valley. Indeed, the latest Yelp investment is being referred to as a “DST deal”.
The infusion of capital should allow Yelp to expand to new cities even as its rolls out new features. The company has achieved a dominant position in the local reviews market, but faces new pressure from Google and Microsoft. At the same time, Yelp is moving into the location-based services territory with its new “check-in” features, taking on startups like Foursquare and Gowalla.
In recent weeks other hot tech companies including Twitter and Facebook have signalled that they were unlikely to go public in 2010. With this deal, it seems likely that we can add Yelp to the list of companies not going public this year.
