Yelp Eyes $2 Billion IPO
Yelp Inc., the online review website, has picked Goldman Sachs Group Inc. and Citigroup Inc. to lead an initial public offering that could value the company at up to $2 billion, according to people familiar with the plans.</br></br>Yelp intends to file its IPO plans publicly within the next few weeks, said one person familiar with the matter. It's aiming to complete the sale in the first quarter, though timing may change with market conditions, the person said.</br></br>Like Groupon Inc., which went public last week and is currently valued at about $16 billion, Yelp also rebuffed an earlier offer from Google Inc. Initially, Yelp raised $56 million in early-stage funding from investors beginning with Max Levchin, a co-founder of PayPal. Two years ago, Yelp rejected a bid from Google for about $500 million, people familiar with the matter said.</br></br>Yelp received an investment of $25 million in January 2010 from Elevation Partners, a private-equity firm, people familiar with the matter said. Elevation also spent $75 million acquiring additional Yelp stock from both employees and earlier investors. That investment valued the company at about $500 million, the people said. The funds from Elevation gave Yelp the time to decide when to pursue an IPO, one of the people said. Elevation has also invested $270 million in Facebook Inc. at an average valuation of $16 billion.</br></br>The reviews site makes money in much the same way as rival Google, by selling ads to local businesses that appear near search results and also by selling premium ads to big brand advertisers. But compared with some other popular ad-based Internet services, Yelp has been slow to capitalize on its popularity with users, in part because its business model requires a large sales force. Facebook, in contrast, was also founded in 2004, but in the first half of this year had revenue of $1.6 billion, mostly from ads, according to people familiar with the matter.