In today’s Finshots, we explain why dating app valuations have declined sharply and what that reveals about the future of digital matchmaking.<\/p>\n
But before we begin, if you\u2019re someone who loves to keep tabs on what\u2019s happening in the world of business and finance, then\u00a0hit subscribe<\/a>\u00a0if you haven\u2019t already. We strip stories off the jargon and deliver crisp financial insights straight to your inbox. Just one mail every morning. Promise!<\/p>\n If you\u2019re already a subscriber or you\u2019re reading this on the app, you can just go ahead and read the story.<\/p>\n The Story<\/p>\n In 2021, Bumble went public at a valuation of nearly $8 billion, and at its peak, the company briefly commanded a market value of around $14 billion.<\/p>\n But over five years, the dating app gradually lost value, and last week it announced it will be acquired by Ithaca Holdings, a tech-focused PE firm, for just $1.3 billion.<\/p>\n And at first glance, this is quite puzzling, don\u2019t you think? After all, Bumble has millions of users, recurring subscription revenue and a steady stream of people looking for relationships. Yet their ability to turn all that demand into sustainable growth is increasingly in question.<\/p>\n And Bumble is not the only company suffering this problem. Match Group, which owns Tinder and Hinge, among other platforms, also lost over half of its valuation since it went public (and over 70% since its peak in 2021).<\/p>\n To understand the problem, we need to look at how dating apps make money.\u00a0<\/p>\n Most follow a freemium model. Users can create profiles, browse potential matches and connect for free. But they can also pay for premium subscriptions, extra visibility, and unlimited likes.<\/p>\n Simply put, the business depends on attracting new users, converting some into paying subscribers, and keeping those subscribers around long enough to recover the cost of acquiring them.<\/p>\n On paper, this sounds like a promising subscription business. But in practice, they face a tricky trade-off: the better they are at helping people find partners, the sooner these people might leave. Yet, to make money, these apps need users to keep coming back and paying.<\/p>\n This, folks, is called the efficacy paradox. But it’s important not to overstate this effect because the bigger problem today seems to be that many users leave without finding anyone at all.<\/p>\n According to a Forbes Health survey<\/a>, 78% of Gen Z respondents who had used dating apps reported feeling burnt out by them. The same survey found that 41% of respondents had ghosted someone and 38% had experienced catfishing (creating a fake identity online to deceive others).<\/p>\n Sure, these are survey findings and not hard data on how users behave on dating apps, but they point to a more immediate problem: users get tired before the app delivers the outcome they want.<\/p>\n A user might spend weeks on an app without going on a date, or go on dates that lead nowhere. And when that experience feels exhausting rather than rewarding, people have little reason to keep paying for premium features. And if you\u2019re on any of these apps, the number of times you\u2019ve installed and uninstalled it proves exactly this point.<\/p>\n On top of that, if a paying user leaves after a short period, the app has only a limited window to recover its acquisition cost and generate a profit. And this is exactly what Bumble faced. In Q2 2026<\/a>, Bumble Inc.\u2019s total paying user base dropped 16.4% year over year (from 3.78 million to 3.16 million across its apps), with the company shedding over 400,000 paying users.\u00a0<\/p>\n Interestingly, Bumble has managed to squeeze more revenue out of each paying user even as its subscriber base shrinks. Its average revenue per paying user (ARPPU) rose from $25.17 in Q4 2024<\/a> to $27.55 in Q2 2026<\/a>.<\/p>\n Sure, price increases and better monetisation can be sensible business decisions. But they cannot indefinitely compensate for a product that fewer people want to use. If people are paying more but still struggling to find meaningful connections, they have even less reason to stick around. And as paying users leave, Bumble has to rely on a smaller pool of subscribers to sustain its\u00a0 revenue to offset the departures.<\/p>\n That\u2019s the trap dating apps risk falling into: making more money from fewer users while doing little to fix the reasons people leave in the first place.<\/p>\n The question, then, is whether the problem lies with dating apps as a business model or with how the biggest platforms have chosen to build their products.<\/p>\n And this is where things get interesting. Because some smaller, more specialised platforms are managing to build thriving businesses in this space.<\/p>\n One way to understand their success is through the lifetime value-to-customer acquisition cost ratio, or LTV:CAC ratio. This compares how much revenue a user generates over their time on an app with how much the company spends to acquire that user. A higher ratio means the company earns more relative to what it spends to bring users in. And for subscription businesses, a ratio of 3:1 is often considered healthy<\/a>.<\/p>\n Grindr, an app built for the LGBT+ community, reported an estimated LTV:CAC ratio above 5x<\/a> (with the industry average<\/a> at 1.0x\u20131.5x), a 33% revenue growth, and a 43% adjusted EBITDA margin for 2024. This could be because niche platforms can build stronger communities around shared identities, interests or relationship preferences. And this is not just the case for Grindr.<\/p>\n Take Feeld or Pure, for instance. These apps are for \u2018ethical polyamory\u2019, and they replace the traditional swipes with a sort of social media feed and disappearing chats. Feeld scaled to 14 million, with revenue increasing over 30%<\/a> year on year, while PURE reached $100 million in annual revenue<\/a> with 95% user growth during a period when generalist apps like Tinder or Bumble saw their users drop.<\/p>\n This shows that a community-driven app can give users a clearer reason to join.<\/p>\n Of course, Bumble or Hinge can\u2019t simply become niche apps overnight. But there\u2019s something they could take away from what these platforms get right. That is, giving users a more meaningful experience (much like the Singapore government<\/a>), rather than an endless stream of profiles.<\/p>\n That means rethinking what happens after someone downloads the app.<\/p>\n Tinder\u2019s events and double-date features, for instance, try to move interactions beyond a screen and into the real world. Apart from this, better safety tools and more thoughtful interactions could make the experience less exhausting. AI could play a role here, too. But the opportunity may have less to do with building a supposedly perfect matching algorithm and more to do with helping people get over the \u2018awkward phase\u2019 of finding a match, much like Hinge\u2019s Prompt Feedback. For the uninitiated, this suggests ways users can make their profile answers more personal and engaging. Hinge\u2019s conversation tools also aim to help users move beyond a match and start a meaningful exchange.<\/p>\n Now all these may seem like small interventions, but they add up and make the experience better for everyone.<\/p>\n And that brings us back to Bumble. Taking the company private gives its new owners room to attempt a turnaround without the scrutiny of public markets. Ithaca Holdings<\/a>, after all, says they\u2019re an investment firm focused on acquiring and growing technology and media businesses where it can deploy artificial intelligence<\/a> to improve operations and scale long-term growth.<\/p>\n Its founders, Ravi Gupta and John Hageman, have exactly the kind of experience to make this turnaround. Gupta was a partner at Sequoia Capital, with experience in running a tech business and evaluating investments. Hageman, meanwhile, worked on Meta\u2019s advertising systems, Feed and recommendation-driven products.<\/p>\n This could help the app get better at showing users people they\u2019re genuinely likely to connect with. Gupta\u2019s experience in operations could help turn those improvements into a sustainable business.<\/p>\n Of course, Ithaca hasn\u2019t announced a detailed turnaround plan yet. And making an app more engaging doesn\u2019t necessarily make it better at helping people find partners. The real challenge will be using technology to improve the quality of connections, rather than simply giving people more reasons to keep swiping.<\/p>\n And perhaps that’s what investors are waiting to see: not whether dating apps can persuade people to pay for more likes, better visibility or another month of premium access, but whether they can build a business around helping people find what they came for in the first place.<\/p>\n Until then…<\/p>\n If you liked this story about why dating apps struggle to find a match with investors, feel free to share it with your friends, family, or even strangers on WhatsApp<\/a>, LinkedIn<\/a>, or X<\/a>.<\/p>\n How Strong Is Your Financial Plan?<\/p>\n You’ve likely ticked off mutual funds, savings, and maybe even a side hustle. But if Life Insurance isn’t a part of it, your financial pyramid isn’t as secure as you think.<\/p>\n Life insurance is the crucial base that holds all your wealth together. 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