The sale of Badoo and Bumble, one of the most successful exits of a funder in the history of the Russian Internet industry, was accompanied by only scant commentary in a press release from Andreyev, the billionaire founder of the companies. The businessman refused journalists’ requests for more specific questions about the deal. He made an exception only for Forbes.
On November 8, a post appeared on the Instagram account of billionaire Andrei Andreyev #42 that no one expected from him. The photo, dated 2006, shows Andreev himself anxiously talking on the phone in front of London cabs. The caption on the photo reads, “This picture is from when I launched Badoo in 2006. It seems like a lifetime ago. For the past 13 years, my mission has been to connect people and build relationships… Today, Blackstone is taking control of MagicLab, and I’m leaving the company to do what I love most – build something big.” The social media post was followed by official reports that the investment company Blackstone had bought Andrei Andreyev’s stake in MagicLab, which combines the dating services Badoo, Bumble, Chappy, and Lumen. The businessman sold his stake in MagicLab, based on a $3 billion valuation of the entire company, received $2.25 billion for his stake and is leaving his position as CEO. His place will be taken by Whitney Wolfe Herd, cofounder of the Bumble service. Together with Andreev, Viktor Remsha’s Finam holding sold a 20% stake.
Back in June, the billionaire assured Forbes in an interview that he was not going to sell the business. “Life in the company never stops booming. Now we have grown to a state where it’s hard to just pick up and sell, it’s a huge machine, a multi-billion-dollar business. The growth rate is high, and now is the perfect time to make a serious move,” said Andreev at the time, alluding to an IPO. Why, six months later, he still decided to sell?
An unexpected deal
Andreyev created Badoo in 2006, and in 2014, together with Tinder co-founder Whitney Wolfe Herd, launched the Bumble service. He invested $10 million and received a 79% stake. In the fall of 2018, the entrepreneur talked about plans to put Bumble on the stock exchange. Later, he launched Lumen, a service for people over 50, and Chappy, a gay dating service. Andreyev did not officially announce the merger of assets and the creation of the MagicLab holding company until July 2019: “The formation of the holding company reflects our belief that the Internet can be used for good purposes and that everyone deserves to find a couple, regardless of social, ethnic or economic background.” The announcement said MagicLab’s holding company will give $100 million to support innovative projects that share the company’s goal of “changing the lives of everyone on the planet by bringing people together.”
Andreyev has been reluctant to comment on the sale of MagicLab. When Forbes asked him for comment immediately after the sale, the billionaire declined to talk about the terms of the deal. He later agreed to answer a few questions. “Time showed that it was time to bring in a new investor and look for a new partner to grow our business,” says Andreev. In June 2019, he assured that the company didn’t need money and that the business was profitable and growing. “Obviously, hiring a strategist and holding an IPO were roughly equivalent options in terms of exiting the project. In the end, the best decision at the moment was chosen. The question here is rather why the creator of the company decided to leave it,” thinks the president of “Finam” Vladislav Kochetkov.
A few months before the deal, the American Forbes published a large investigation entitled “Sex, Drugs, Misogyny, and Immorality at the Bumble Owner’s Headquarters. In it, former employees of the dating service Badoo told Forbes about the toxic atmosphere at the company’s office.
However, Andreev himself does not recall this article, commenting on the sale of the company. The entrepreneur says that in the process of searching for a new partner and investor he began to receive offers from major international banks. That’s how he came to know the investment company Blackstone, which manages $500 billion in assets. “Finally I felt that someone really understood the potential of our business,” says Andreev. In talks with Blackstone, Andreev says, they first discussed selling a minority stake, but then the parties agreed to give the investor control of MagicLab. Blackstone spokesman Matthew Anderson declined to answer Forbes’ questions about future plans for MagicLab. “It is our standard practice not to comment on such matters at this stage of the transaction,” Anderson wrote in response to an inquiry.
Before the deal, Andreyev’s stake in MagicLab was 75%, according to Forbes, a source familiar with the terms of the deal. Andreyev himself did not comment on the valuation of MagicLab or the size of his stake in the company. President of Finam Vladislav Kochetkov confirmed for Forbes that the holding sold its stake of 20%, based on a total estimate of the company, close to $3 billion, having received from the transaction about $ 600 million. According to Kochetkov, Finam is satisfied with the company’s estimate. “In our opinion, the deal was done at a comfortable price. It took into account both the position of the global leader in the dayting market and the significant growth potential that remains.” As a result of the deal, the fortune of Victor Remsha, partner of Andreev and owner of Finam, will increase from $800 million to $865 million.
Tinder Girl
Andreev ceded his place as CEO of the company to Whitney Wolfe Herd. “It’s time for me to pass the baton to my dear friend and partner Whitney Wolfe Herd, who will take over as CEO as the company moves to new heights,” Andreev said. According to Forbes’ source, Heard received a 5 percent stake in MagicLab before the deal. In mid-June 2019, the Bumble co-founder announced on Instagram that she was pregnant. The baby is due at the end of November. The question of who will run the company during Heard’s absence after the baby is born was left unanswered by Andreev and a Blackstone spokesperson. Whitney Wolfe did not answer Forbes’ questions, and a spokeswoman said she was unavailable for comment. In Blackstone’s official announcement of the deal, Whitney Wolfe says she is honored to become CEO of the group. Dmitry Volkov, investor and co-founder of Dating.com Group, is confident that Blackstone was interested in Bumble and Wolfe Heard herself: “The Bumble story is a story of very precise, good marketing, built primarily on the personality of the founder. They bought Whitney as the emblem that the business needed to move forward.”
What Andreev himself will do after the deal is unknown. “My next project is still a secret, but big news will follow very soon,” the entrepreneur says. In the summer, he was going to invest in 10 tech startups from Russia and hold mentoring sessions with them. Finam’s Kochetkov says that he does not know anything about the billionaire’s new projects yet: “Given more than 15 years of successful co-investment experience with Andreev, we would gladly consider participating in them.