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Aspiring entrepreneurs often approach me as an angel investor, touting their innovative idea for yet another online dating site. I agree the need is out there, with over 91 million interested singles between the age of 19 and 45 around the world. Yet almost no one in this business makes any money, since it comes with a larger list of challenges than most other opportunities I see.
Related: This Dating App Lets Your Actual Heart Choose Your Matches
Thus, I encourage you to consider these challenges as reality checks for your own business idea -- dating or otherwise -- before spending all your time and someone else's money in vain.
1. The market is already oversaturated with competitors.
According to statistics, there are more than 5,000 dating sites worldwide with 1,000 new ones appearing every year. If you check your market on Google and find numbers like these, I suggest you look for another opportunity where the number of competitors you can find is less than 10.
2. This business suffers from the 'Facebook model' startup problem.
Many business opportunities, like this one, need thousands or millions of existing users before new users and advertisers are interested to pay real money. Thus, the investment in time and money required before payback is huge. Facebook spent $150 million before positive cash flow.
3. Barriers to entry are difficult to establish.
For a new startup, the best way to assure survival is to file patents or other intellectual property to keep future competitors from copying your success. Dating is not a highly scientific process, and the first-mover advantage has already been taken. Think about this challenge for your best idea.
4. Separation from existing major businesses is small.
In reality, dating is a form of social networking, so Facebook could easily enhance their services in this direction, if the market traction of others was evident. Google or other search engines could add image-matching or other focus to capture this market. The best startups have real differentiation.
5. Business area is fraught with misrepresentation.
Online dating scams to get money or attention are a very common and growing problem, according to several articles on the Huffington Post. For starters, 40 percent of frequent site users are already married. If your new idea has that same potential for misuse, is it worth the risk to your reputation?
Related: John McAfee Offers Ashley Madison Post-Hack Analysis
6. The customer value proposition is difficult to quantify.
Investors and customers alike want to see return that can be measured against the costs. Value propositions such as "easier to use" or "find better partners" rarely compete with terms like "half the cost" or "50-percent faster." Make sure your new innovation has a quantifiable value proposition.
7. Beware of high turnover and minimal loyalty situations.
Loyal repeat customers who become locked in by a high cost of switching are the dream of every investor and smart business. Dating services lose customers quickly when they find a match -- or when they don't find a match. Look for a business opportunity with low customer churn potential.
8. Steer clear of business areas that are not squeaky clean.
Dating sites are tagged as having historically high failure rates and a hint of business hustle, so they are avoided by professional investors. Others in this category would include online gambling, debt collection and work-at-home offerings. Your new opportunity should avoid these qualms.
Yet the online dating market, like every other one, has many new opportunities for those entrepreneurs willing to think further outside the box. Recent ones that I have noticed include DoggiesMatch for pet dating, OurTime for singles over 50 and SupernaturalDating for paranormal enthusiasts. Even though these all sound interesting, please don't ask me to invest.
I always tell entrepreneurs that even if you are bootstrapping and not looking for investors, it's still important to apply external investor thinking to your new venture. As founder, you are always the biggest investors and should apply the same reality checks.
Related: 1 Billion Matches Later, Tinder Can Trace Its To-the-Moon Growth to Signing Up Sorority Girls
How well does your latest startup idea avoid the challenges outlined here? Your success and livelihood may well depend on it.
FAQs
Internet dating dangers
- Online dating fraud. Scammers exploit people looking for romantic partners. ...
- Stalking. Stalking is unwanted behaviour carried out by obsessive or fixated individuals whose actions disrupt their victim's life. ...
- Sexual abuse.
Some of the positives include growing a social network, gaining new friends and having a sense of safety and control. However, some of the drawbacks to dating online include the time, effort, lack of success, unwanted sexual messages, and the risk of people misrepresenting themselves.
Is online dating becoming less popular? ›
Generally speaking, dating apps are losing their appeal with daters of all ages. There's an increasing feeling that the algorithms aren't helping them find what they want—or that dating app companies are only there to upsell their customers by hiding helpful features and users behind paywalls.
Why do dating sites fail? ›
The collapse of dating apps' usability can be blamed on the paid subscription model and the near-monopoly these apps have over the dating world. While dozens of sites exist, most 20-something daters use the big three: Tinder, Hinge and Bumble. (Older people often gravitate toward Match.com or eHarmony.)
What are the dangers of Internet dating? ›
5 unique dangers of online dating
- Underage users. It is essential that users meet a minimum pre-defined age limit, to protect your customers and your site from legal and reputational damage. ...
- Romance scams and catfishing. ...
- Bots. ...
- Multi-accounting. ...
- Sexual predators.
Many therapists had come to the conclusion that it is safer to err on the side of caution and not date online, making their life simpler but also, it could be argued, statistically reducing their chances of meeting someone.
What is the dark side of dating apps? ›
Experts on the show argued these platforms are deliberately addictive. Anastasia Hronis, a psychologist from the University of Technology Sydney, revealed her studies showed dating apps triggering the same dopamine rush as gambling. “Just the thought of checking for matches can set off a dopamine hit,” she explained.
Is online dating bad for your mental health? ›
It's reported that dating app users face three times the amount of stress compared to non-users. With online dating, you miss that personal connection during a first impression and many view dating apps as being based on physical attraction. This can lead to comparing yourself to others and increased self judgement.
Why don't dating sites work? ›
One of the main reasons why people struggle with dating apps is because they are not clear about the person they want to meet. Simply swiping through numerous profiles will not produce the man or woman of your dreams. You must have a clear image in your mind of the person you want to meet.
Why are Gen Z not dating? ›
At least 95% of Gen Z using the dating app Hinge are fearful of rejection and over half say worrying about rejection has held them back from pursuing potential relationships, according to Hinge's dating trends report published in February 2024.
Eventbrite's report shows that Millennials and Gen Zers have soured on dating apps because the apps make it hard to find people who share their interests. There's also a safety concern, as many people misrepresent themselves or even hide their true identity on dating apps.
Why are people leaving dating apps? ›
While there are active deterrents for younger generations to steer clear of dating apps, some are simply ditching them out of a desire to just meet someone in real life. “I don't want to just be chatting people online,” Mason says. “I don't want a penpal.”
Why are dating apps so bad now? ›
A surge of scams, fake AI-generated profiles and harassment is making dating apps increasingly unfriendly to users. About 4 in 10 North American users have encountered a scam on a dating app, while about 2 in 10 have fallen for one, according to estimates from cybersecurity company Kaspersky.
Is Bumble declining? ›
Online-dating woes hit Bumble Inc., which late Wednesday guided for lower revenue growth for the year and the current quarter, and saw its stock fall nearly 30% in the after-hours session. said it expects 2024 revenue growth between 1% and 2%, and, for its Bumble app, revenue growth in a range of 1.5% to 2.5%.
Why is online dating not safe? ›
Matching up to danger
People are more likely to give up information to those they have been 'matched' with in the online dating world – 16% give out personal details to matches, 15% tell matches embarrassing things about themselves and 14% provide their matches with private or unclothed photos of themselves.
What are the challenges in online dating? ›
5 of the biggest problems with online dating
- Scammers prey on vulnerable individuals. ...
- People lie. ...
- Hackers can access your information. ...
- You could be putting yourself in danger. ...
- Dating scams can be extremely costly.
Like any dating, online dating can be tough. Other people may be rude about who you are, how you look or what you're interested in, and that rejection can harm your self-esteem. If you do connect with someone online or in person, you may find they don't care about your feelings or respect you.
Why do people not like online dating? ›
1) Inherent risks when you're searching for someone online. The ability to evaluate character online can be hard. You miss out on things like body language, tone of voice, and other qualities that can help guide your instincts and protect yourself.
Why is dating online so hard? ›
Many people find dating difficult because of the impersonal nature of dating apps and the sheer amount of potential dates to choose from. Dating can also be tough because it's hard to figure out what other people want from the relationship (and if they're being honest about that).
