Another aspect is profitability. Most friend-finding websites were, in their early stages, financed by VCs, as well as capital from other sources. Without a strong profitability model, it is hard to attract new VCs (over 50 dating-based websites are currently struggling to make ends meet). Without refinancing and the promise of sound returns, angel investors have no way of exiting their investment.

At that point, Ma's experience and business contacts in the wireless value-added services industry and Liu's experiences in wireless network research, development and management, all kicked in. The key factor for 163.com to turning a profit was text-messaging revenues from the wireless value-added service "idate.163.com." Ma happened to be in charge of this project. He and his team came up with the idea of making wireless value-added services the major source of revenue for their new friend-finding website.

Ma Yun's team quickly came up with the profit model. It involved establishing a communication and interactive platform based on the Internet in collaboration with mobile telecommunications operating services including SMS, MMS, WAP (wireless application protocol) and IVR (interactive voice response), to meet the demand for online friend-finding and community activities, and providing members with entertainment services such as music and video.

The main aim was to attract those who wished to make friends online or seek romance online to join the community as a standard member. If a member then wishes to become a VIP, he/she must pay an extra fee. Members could take part in community entertainment activities and make friends via the paid wireless value-added services. Revenue also would come from online advertising.

Xu continued his story: In addition to the impressive background of the team, his decision to invest was also based on the clear motivation and goal of the team. This is very important and is reflected in the efficiency of ERP (enterprise resource planning). Most of the teams he interviewed could not achieve it.

As angel investors, Jovan Ventures and Dragon Venture Inc. jointly invested $1.8 million in the form of shares in Ma's team. In 2005, Yeeyoo.com became profitable and was rated as one of the 100 non-publicly listed companies with the most potential by Red Herring, a U.S. technology and finance media organization.

In January 2006, Meetic, the largest European friend-finding website, acquired Yeeyoo.com for $20 million with the help of Jovan Ventures. As a result, Xu and the other angel investors were well rewarded.

The financial returns are indeed very tempting, but in fact, angel investors tend to be most proud of their vision and risk-taking spirit during the investment phase.

(Xinhua Finance)

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