AOL announced two locally focused platform acquisitions today: Patch, which is designed to bring news and other information to local communities, and Going, which helps people find stuff to do in their areas. In the press release announcing the acquisitions, new AOL CEO (and former Google exec) Tim Armstrong said local was “prime for innovation and an area where AOL has a significant audience.” Moving forward, Armstrong said, “[L]ocal will be a core area of focus and investment for AOL.”
The Patch acquisition has a twinge of corporate nepotism about it. Polar Capital Group, Tim Armstrong’s private investment company, was an early investor in the company, and the only one mentioned on Patch’s web site. A note about his support for Patch may suggest the direction Armstrong plans to take AOL. It also makes clear that Patch, for him, is something of a labor of love:
Polar invested in Patch because Tim believes that Patch should be in every community in America, and wants Patch in his town. He wants to read local news stories done by journalists, make sure that local government is transparent and accountable, see all the ways he can give back to his community, and have his town be as interesting and alive online as it is offline. Tim is also a believer in American ingenuity and knows that products like Patch will help deliver a commercially viable way for communities to support the important work of local journalists, institutions, governments, and businesses.
Armstrong promises not to take undue profits from buying his own investment. In a company-wide memo sent to AOLers, Armstrong writes:
I was an early investor in Patch and committed significant dollars to the vision of improving local communities with deeper online information, accountability through journalism, and a platform for communicating. In discussing our local strategy, AOL and Time Warner looked at Patch as a possible acquisition and I recused myself from that process. At the Time Warner negotiated acquisition price, I was in a position to earn a return on my investment in Patch. However, I have decided to forgo any profit from my seed investment in Patch and I have asked to receive just my seed capital in AOL shares once we separate from Time Warner.
Going had previously raised $5 million in a round led by General Catalyst Partners and Highland Capital Partners. Neither of the deals’ terms were disclosed.