GoFundMe acquires YouCaring as charitable crowdfunding continues to consolidate

GoFundMe, the startup that focuses on crowdfunding for charitable causes, has made another acquisition to scale up its platform: It has acquired YouCaring, a smaller rival, creating a combined community of around 60 million donors in some 19 countries in the process. Financial terms of the deal are not being disclosed, but it comes amid a flurry of acquisitions in the space as smaller companies look to consolidate in the face of growing competition from the likes of Facebook, and, it seems, Amazon.

Other acquisitions among charitable crowdfunding startups have included GoFundMe buying CrowdRise (and relaunching it last month), and YouCaring acquiring Generosity.com from Indiegogo in January of this year.

GoFundMe says that current YouCaring campaigns will continue as is if they have been started on the latter site or have the option to move to GoFundMe. Future campaigns will all be initiated on GoFundMe. Campaigns will be backed by GoFundMe’s guarantee going forward.

Crowdfunding has become one of the biggest levers for raising money over the internet. Using emotional storytelling campaigns that spread virally through social media (and more traditional media), charitable giving specifically has been given a huge boost. GoFundMe was already the world’s biggest platform for causes-based online giving, and this deal will extend its margin further.

It’s not completely clear why GoFundMe decided to gobble up YouCaring (or YouCaring chose to sell up), rather than both continuing to grow organically, but one reason could be because of changing business models in the charitable crowdfunding space.

Last November, GoFundMe announced that it would drop the 5 percent platform fee that it was charging for personal campaigns in the U.S. (its biggest market) and opt for a tips-based model. Notably, this is the model that forms the basis of how YouCaring — which is profitable — works.

“We have never had a platform fee and never will,” Dan Saper, CEO of YouCaring, told me earlier this year. More than 70 percent of all its users tip the company something, he added. “It has been remarkably sustainable and predictable,” he said. “We treat people like adults and let them decide who to support and how much to give.”

YouCaring also has the distinction of having hosted and run the largest crowdfunding campaign of all time, on any platform, raising $37 million for JJ Watt’s Hurricane Harvey Relief Fund.

It could be that GoFundMe decided to bring in YouCaring either to help it build out its business in the tips-based space, or to work more closely with high-profile fundraisers, or (more cynically) to take out its closest independent rival in order to have less competitive pressure around how it chooses to build out fees and tips in the future. (We’re asking the question and will update as we learn more.)

For now, the combination is being described by GoFundMe as a move to strengthen its lead in the market — putting truth to the adage of “strength in numbers.”

“GoFundMe and YouCaring share a common mission of making it easier than ever for people to get the support they need. With this acquisition, we strengthen our position as the place where more people can unite to make an impact far greater than they can on their own,” said Rob Solomon, CEO of GoFundMe, in a statement. “We’re excited to welcome the YouCaring community to GoFundMe and empower a global community of more than 50 million changemakers to help make a difference in each other’s lives.”

GoFundMe has never revealed how much it has raised from investors, but its backers include Iconiq, Stripes Group, Accel, TCV, Greylock and Meritech. YouCaring also has never disclosed how much it has raised and has only ever disclosed one backer, Alpine Investors.