Yelp Takes $10 Million from Benchmark

Local reviews site Yelp is to announce $10 million in funding from Benchmark Capital on Thursday. Yelp is still pretty small, receiving 1.5 million unique visitors in September, though that’s grown 200 percent since the beginning of the year. The San Francisco-based company’s biggest stronghold is its hometown, but it also has significant presences in Boston, Chicago, New York, Los Angeles, and Seattle.

Yelp is both a social network for active reviews writers and an informational site for passive reviews readers. It competes with Insider Pages, among others. While the company has gained notoriety for sponsoring hedonistic offline events, CEO Jeremy Stoppelman in an interview Tuesday preferred to emphasize future feature additions such as business hours, wiki-style information editing, and designations of things like family-friendly or cash-only establishments. He said Yelp will use the new money to keep doing pretty much what it’s doing now.

Yelp, which has 30 employees, has raised $16 million to date — $10 million in this round, $5 million from Bessemer Venture Partners nearly a year ago, and $1 million from PayPal founder Max Levchin, who incubated the company before going full-time at sister startup Slide. Interestingly, Bessemer did not participate in the latest round. Benchmark’s Peter Fenton, who recently left Accel Partners, will be joining Yelp’s board along with the new investment.

Stoppelman would not disclose whether or not Yelp is profitable. Our sources tell us the lifetime value of a typical review online is about $30 in advertising. However, Yelp is pretty picky about ad inclusion. The company uses ad networks and in-house sales to bring in local advertisements, which are placed in relevant search results and on similar businesses’ pages. Advertisers aren’t accepted unless 1) the business has already been reviewed by a Yelp user and 2) it has received a rating of at least three stars on average.

About six months ago, Internet startups without acquisition-worthy technology seemed to be universally dismissed out of hand. Yet investors are now giving hefty second rounds to content aggregators like Yelp and Eventful. Regular readers know what Om would say: return of the eyeballs.

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