GeniGeni, a web 2.0 genealogy site received $10M funding with a post money valuation of $100M.

I am not surprised about its funding, but I am surprised about the speed of the of the round, and the valuation.

Some background: Geni was launched a few weeks ago (I was one of the early users of the system. I stopped using it when the system crashed on the first day, and when I realized that there was no easy way to export the data). In a few short weeks it has acquired 100k registered users. Geni did a $1.5M fundraiser earlier this year from Founders Fund. And now Charles River Ventures paid a 10x valuation from the previous round, for 10% of the shares. Geni has received a lot of coverage: Venturebeat, NextNet, Techcrunch to name a few.

Geni does have a lot of buzz words associated with it; Web 2.0, Social networking, but even then, a $100M price tag sounds more like a capital fund willing to pay ANY price to get in to a hot startup, rather than refelecting the real valuation of the company. Nothing wrong with it, per se; Things are worth what others are willing to pay for it. But we have been through this before; After everything is said and done, the fundamentals have to make sense.

A $100M valuation now means that one is expecting $1B valuation at some point, which will require a revenue of $150M or so; I find it hard to imagine that a geneology website, no matter how good, can ever generate that kind of revenue.

One particular issue that depresses the value of the genealogy sites is that it is a good place to attract new users but very hard to keep them there. Most of the users will visit the site a couple of times in the first week and then never return to it. It is not going to become the next Myspace of Facebook. I wonder how many of the 100,000 initial users that Geni got have returned to the site after one or two visits? Should one really count them as users of the site?

There are also several other sites that have impressive databases: One of the biggest is The Generations Network (MyFamily.com), which owns Rootsweb.com and Ancestry.com. There are also TribalPages.com, OneGreatFamily.com, Genealogy.com and Allfamilytree.com.

George Zachary of Charles River Ventures recently commented on the valuation of Geni as:

It’s a company with global breakout potential that’s showing a clear ramp to getting there.

Back when Skype and Facebook were funded, people were surprised by the valuations in both companies. And we are seeing signs that Geni is on a similar ramp.

Well, interesting times we live in for sure!

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