AOL Buys Out Patch.com, A Startup That Armstrong Invested In
AOL has bought out a local news website called Patch.com. Tim Armstrong invested seed capital in Patch.com back in 2007. As part of the deal, Armstrong will not profit from the seed investment he put in. However, he will receive his seed capital back through AOL shares once the company separates from Time Warner.
Armstrong’s seed capital was made through his private investment company Polar Capital Group. Another acquisition that AOL announced is Going.com. The price of both properties were not disclosed.
The full press release is available after the jump.
AOL today announced two acquisitions in the local space: Patch Media Corporation, http://www.patch.com, a local news and information platform aimed at serving local towns and communities and Going, Inc., http://www.going.com, a local platform for people to discover and share information about things to do in a number of leading cities across the country. Both Patch and Going offer local experiences, content and self-service applications for consumers and advertisers.
“Local remains one of the most disaggregated experiences on the Web today — there’s a lot of information out there but simply no way for consumers to find it quickly and easily,” said Tim Armstrong, AOL ’s Chairman and CEO . “It’s a space that’s prime for innovation and an area where AOL has a significant audience and a valuable mapping service in MapQuest. Going forward, local will be a core area of focus and investment for AOL . The acquisitions of Patch and Going will help us build out our local network further with excellent local services that enable people to stay better informed about what’s going on in their neighborhood.”
The acquisitions extend AOL ’s network of local services, the largest online local network,* reaching more than 54 million total unique visitors per month.** Both acquisitions also leverage a consumer and marketplace trend toward greater consumption of news and information online.
A recent survey by the Pew Research Center for the People & the Press found that more people now say they get most of their news from online sources than from traditional newspapers (40% vs. 35%).***
In addition, local searches grew 58% in 2008 year over year, while overall searches climbed just 21%, according to research conducted by the Yellow Pages Association in March 2009.
Local advertising (online and offline) represents an approximately $103 billion market (approximately 39% of total U.S. ad spending), according to Borrell Associates in 2009.
Founded in December 2007 and headquartered in New York, Patch combines localized, professional journalism with community contribution and a platform that puts all town assets online – in effect, digitizing the community. Patch, which expects to be available in a dozen communities by the end of the year, currently has “Patches” in five communities with four more in development.
“We are excited to join the AOL family,” said Jon Brod, CEO of Patch. “AOL’s substantial network will help us extend the reach of Patch into more and more communities. And Patch, as part of AOL’s local strategy, will create new opportunities for AOL to delight consumers and provide marketers access to highly targeted and deeply engaged audiences.”
Launched in September 2006 and headquartered in Boston , Going is one of the leading local communities for 20-somethings looking for things to do in cities across the country. Going is available in 30 leading U.S. cities, including New York , Los Angeles , Chicago , Miami and Boston , with several more planned this year. Going also provides local promoters, event organizers and venues a fully automated, self-service RSVP, ticketing and advertising engine to maximize the attendance and value of their events.
“Going allows young people in leading cities to discover upcoming events, parties and new hot spots – and most importantly connect with others who share a similar lifestyle. By joining with AOL, we have the opportunity to greatly expand the reach of our platform to more cities both in the U.S. and around the world,” said Evan Schumacher, Going’s CEO.
“AOL has a legacy of connecting people to the content, community and services they care most about,” said Armstrong. “Patch and Going, combined with our existing network, will enable the company that got America online, to connect consumers around the globe to their communities online.”
* April 2009 U.S. comScore Media Metrix; Local Networks category is a custom built category by AOL .
** Custom AOL-defined Local Networks report, based on comScore U.S. Media Metrix Audience Duplication report (April 2009).
*** Pew Research Center for the People and the Press, “Internet Overtakes Newspapers as News Outlet,” December 2008.This article was written by Amit Chowdhry. You can follow me at @amitchowdhry or on Google+ at +AmitChowdhry