Kara Swisher

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GoDaddy Acquires Merchant “Finder” Startup Locu for $70 Million


GoDaddy, the Scottsdale, Ariz., domain seller and small business online platform, said it had acquired San Francisco startup Locu.

While the company did not disclose the terms of the deal, sources close to the situation said it paid $70 million in cash and stock for the company. There are also earnouts for the close to two dozen employees of Locu going to GoDaddy.

Investors, including General Catalyst Capital Partners, Lowercase Capital, Lightbank and SV Angel, obviously got a nice return from their $4.6 million in funding.

The acquisition is part of an aggressive strategy by GoDaddy CEO and former Yahoo exec Blake Irving to add to the privately-held company’s offerings to small businesses online. Locu, which was founded out of MIT in Massachusetts in 2011, helps local merchants get discovered online. It has more than 30,000 businesses, including restaurants, spas, salons, accountants, photographers and home-remodeling companies, using its network platform.

Locu has built profiles for more than one million businesses across the U.S., noted Liz Gannes in a recent post, “by doing the grunt work of sending out contractors to input and correct menus from restaurants and building a semantic analysis system to interpret all that data.”

Using Locu, small business can do real-time updates to their online info, such as menu and service lists, using several devices to do so. Locu had started charging $25 per month for the full range of these distribution services.

It also has partnerships with Yelp, YP.com, Foursquare, TripAdvisor and Facebook, and its results appear on big search services, such as Google.

Locu was already integrated into GoDaddy’s Website Builder offering. “We are hell-bent on helping the little guy on the Internet,” said Irving in an interview about the deal. “Locu has articulated perfectly how to solve the problem of being found.”

Added Rene Reinsberg, CEO and co-founder of Locu: “We had a great integration partnership and felt GoDaddy could accelerate Locu’s growth. We have a concept of digital identity for small businesses that allows them to keep control of their information on the Web.”

What he did not say is that while sites like Google are partners, that it and others are also trying to establish control over those merchant relationships and that a small, though helpful, startup like Locu had a lot of competition ahead as it, too, moved into the transactions space. As Gannes noted, “that could make today’s partners into tomorrow’s frenemies.”

GoDaddy said Locu will continue to operate out of their San Francisco and Cambridge offices and it will continue for now to operate the brand.

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