NEWS

Yelp Inks $10M Series B From Benchmark Capital

VentureWire
10/5/2006
By Clancy Nolan

Yelp Inc. has sealed a $10 million infusion from Benchmark Capital to expand its city guides, which provide locally focused, user-generated reviews across a handful of cities including San Francisco, New York, Chicago and Seattle.

Benchmark, which has invested broadly in consumer Internet services ranging from social networking site Friendster Inc. to the virtual world Second Life, contributed the entire $10 million Series B round. "We try to get an ownership stake," said General Partner Peter Fenton, though he declined to say what percentage of Yelp Benchmark now holds.

Existing investors Bessemer Venture Partners and former PayPal co-founder Max Levchin agreed to forgo participation in the round to accommodate Benchmark's investment, said Chief Executive Jeremy Stoppelman. Yelp previously raised a $5 million Series A round led by Bessemer, and an undisclosed amount of seed financing from Levchin.

With the new capital, Yelp will continue to expand into new markets, expand its staff and build out advertising for all of its sites. Yelp is currently adding advertising to its San Francisco-based pages and will expand to other cities.

The San Francisco-based start-up faces competition, however, from a crop of Web sites that enable users to post and rank local businesses. Companies with similar models include IAC/Interactive Corp.'s Citysearch.com, Judy's Book Inc.'s Judysbook.com, Tribe Networks Inc.'s Tribe.net, and Insider Pages Inc.'s Insiderpages.com, to name a few.

Unlike Citysearch, Yelp relies on user-generated reviews for everything from restaurants to mechanics and does not produce its own editorial reviews.

"It was clear that everyone in our world felt that local was an unmet need...the interest in the market has always been there," said Benchmark's Peter Fenton, who began looking at Yelp about a year ago. "The issue that we faced was which one of those companies would break out and win."

Fenton was compelled by Yelp's growth in the past year, he said. Yelp.com saw 1.5 million unique visitors during September, said co-founder and Chief Executive Jeremy Stoppelman, a more than 200% up-tick from the beginning of 2006.

Yelp was formed in 2004 by former PayPal Inc. employees Stoppelman and Chief Technology Officer Russel Simmons.