Angie's List strikes big with $22M

The consumer review site was backed by Wasatch Funds and Battery Ventures

Financial trends and news by Faith Merino
September 21, 2010
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Looking for a solid doctor who’s willing to talk to you instead of just scribbling out a prescription?  Or maybe a landscaping service that will do what you want without going $3000 over your budget?  Or maybe a good, trustworthy mechanic?  Web users can find all of these people and services on Angie’s List, a website where consumers can rate local doctors, contractors, and companies, and the site just got a big financial boost. 

The company announced Tuesday that it has raised $22.5 million in an equity financing round from “multiple institutional investors,” including Battery Ventures and several public fund managers, such as Wasatch Funds and other unnamed funds participating for the first time.  This recent round of funding brings Angie’s List’s total financing to $91 million.

Launched in 1995, Angie’s List allows paying members to look up local services and healthcare providers, see what other consumers have said about them, and rate them.  For a monthly fee of $8.99, an annual fee of $35.25, or a 4-year membership for $113, members can gain access to hundreds of reviews for a wide range of services. 

The money from this round of financing will be used to expand the company’s group coupon service The Big Deal, in which Angie’s List works with top reviewed companies to bring discounts to members and non-members if enough people sign up.  The Angie’s List Big Deal currently operates in 30 local markets, but the company expects to offer group coupons through the Big Deal in 50 local markets by the end of 2010.

“We see ourselves as a premium service that offers much more than just a site that collects virtual drive-by rants and raves,” said Cheryl Reed, communications director of Angie’s List, in an email.  “Many of our members joined Angie’s List when they bought their first house, thinking they’d use us to find a few contractors and then be done. But we’ve grown with them and now offer consumer reviews in more than 500 categories of service, so they’ve stuck around to find the best local doctors, dentists, pet sitters, painters, wall paper strippers, you name it.”

But why pay when consumers can get the same service for free at Yelp or any other free online consumer review site?

“For many of our members, Angie’s List is a community where they swap stories about contractors/service pros and they rely on each other to share their experiences.  So we’re not just a black hole where people yell or cheer and then go away – we’re a resource,” said Reed.

There are also a couple of other features that Angie’s List offers that free services like Yelp don’t.  For one thing, members are not allowed to post anonymously, to ensure accountability and accurate reporting.  Secondly, businesses and companies are not allowed to rate themselves or pay customers to rate them (thus excluding word-of-mouth or friend-referral advertising on Angie’s List).  Top rated businesses are allowed to advertise on Angie’s List, but only if they offer Angie’s List users an exclusive discount.

Angie’s List was also in the news recently as several doctors have implemented policies requiring patients to sign contracts promising not to post negative reviews of the doctor on review sites (like Angie’s List), and even promising not to allow friends or family to post negative reviews.  Angie’s List retaliated by promising to flag doctors on the site who require such contracts.

That said, Angie’s List seems to feature an inordinate amount of positive reviews.  Many of the services and companies have been rated with ‘A’s, which I find a little odd, since the only time I, personally, ever take the time to review anything is if I really, really haven’t liked it and I want the world to know.  I can’t imagine it would be that hard for a business to sign up on Angie’s List using a personal email address and simply pay to review itself disguised as a consumer.  But the site has a screening service in place to ensure authenticity and objectivity of all reviews, and to be sure, there are bad reviews--they're just all listed in the back (businesses and healthcare providers are listed according to positive reviews).

Free consumer review site Trusted Opinion also has a healthy mix of positive and negative reviews, but for peace of mind, it is understandable why users would gravitate to Angie’s List.

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(This article has been amended to account for the way in which businesses and services are listed.  Previously, it read that all reviews were positive, but that is because businesses and services are listed by positive reviews.)

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