Under-funded but plucky Keynoir sold to Time Out after CEO departs

Groupon clone Keynoir launched only last year, describing itself as a “private buying club meets Woot“, although in time it simply looked like much of the other Groupon clones, even as its offers centred on a well-off audience. It secured a significant £1.3m of investment from PROFounders Capital and Index Ventures (including Dominique Vidal). Serial entrepreneurs Paul Birch and Andrej Henkler participated. It even had a stellar launch team in Philip Wilkinson (founder of the UK’s first price comparison engine which later became Kelkoo), Glen Drury (ex-MD Kelkoo Europe and VP Yahoo), and Jan Riem. It launched in London and had plans to expand across the rest of the UK and Europe by the end of 2010. None of that happened.

Just over a year later, it’s now been sold off to city media empire Time Out Magazine. Terms were not disclosed but it seems likely the sale was 2-3 times it’s initial funding round – not a stellar exit, but one that has to be taken in the context of larger, better funded competitors.

Although it built a differentiated position (high-end, handcrafted, with higher than average basket size), a loyal customer base and relationships with many top end-merchants, it never raised as much capital as Living Social, Groupon and therefore has been a “slower grower”.

With Keynoir, users were supposed to will buy lifestyle experiences (such as hotels, restaurant bookings and spa days) and more “unusual and secret things”. One offer a day with a limited time window and limited quantity of offers was supposed to drive adoption. Not everyone who arrived at the site was supposed to become a member, keeping it exclusive. At launch, backer Brent Hoberman called it the start of a “a new generation of social buying which will effectively connect the offline and online worlds.”

But we heard a few weeks ago that a sale might be on the cards. My sources tells me Keynoir it wash’t quite the smash hit the owners had hoped it would be.

Sean Seton Rogers, of PRO Founders Capital told me: “Well yes, it never got to that level (rest of Europe)! But the company did build a very loyal base of customers in London. Time Out is looking to invest far more capital into the market, both Keynoir and their Time Out Deals product, and also expand Keynoir into other cities.”

Time Out Group publishes the popular city guides and ticketing services which are under threat from the likes of offers-based site like Keynoir. Time Out also recently bought the LikeCube software recommendations business.

Keynoir will now run alongside Time Out daily deals, launched in May. The sale price is being kept confidential, with CEO Graeme Walker, the former CFO, staying on.

It seemed like a good idea at the time. But Wilkinson is an entrepreneur known to have itchy feet after starting something and he left this year to found a coffee subscription business.