Is there a bubble in genealogy?

Tracing ones family – or genealogy as it is known – is hardly a new idea. After all, who as a child has not asked their granddad what he did when he was growing up? But since the turn of the century interest has ballooned in the UK. There are many reasons, some linked to our changing society and others driven by technology.

The increase in migration in and out of the UK has fuelled interest in tracing ones roots, especially for second-generation immigrants. Britain’s empire history has left links with most English-speaking countries.

Meanwhile people who served on the battlefield or the home front in the Second World War are reaching the end of their lives. At the same time the oldest of the “baby boom” generation reaches retirement age in 2012, giving them more free time to research their forebears. Lastly the dawn of a new millennium and the terrible events of 9/11 have created the feeling of the end of an old era.

But it was the Internet that took genealogy out of the domain of the professional researcher and into people’s front rooms. Vast swaths of information became accessible at the touch of a button, culminating in the Government’s decision to put the 1901 Census online. The level of interest was so great the site crashed on its first day as it was besieged by thousands of amateur family historians.

The Internet enabled amateurs to swap information and tips across continents in a similar way that “open source” exchange of information was key to the growth of the Internet itself. Television has also got into the game with shows such as the BBC’s Who Do You Think You Are? (WDYTYA?) that took household names such as Moira Stuart and Natasha Kaplinsky on journeys into their family past with unexpected and sometimes deeply moving destinations – and in Kaplinsky’s case 6.5 million viewers.

The private sector has not been slow to tap into the new market. The UK has several websites offering assistance to people tracing their family history. Some, such as Genes Reunited, an offshoot of Friends Reunited, have adapted the “open source” principle by enabling members to collaborate by sharing family trees that might contain cross-overs with each other. Access is free but users subscribe to send messages to members. The site enables people to search for relatives in all other trees, enabling them to spot areas where other trees overlap with their own.

Another key element is the ability to access key sources of information such as records of births, marriages and deaths, passenger lists, the BT phone books, and wartime and parish records. Ancestry.co.uk, part of US group ancestry.com, has around 200,000 members, many of whom pay annual membership of almost £80. One predominantly free resource is FamilySearch.org, a non-profit service sponsored by The Church of Jesus Christ of Latter-day Saints that has the world’s largest collection of microfilmed records.

A separate growth industry is the software that enables users to build a family tree by attaching photos, documents and new facts and records found on the web. Examples include Family Tree Maker and Genealogy Pro. Meanwhile the Society of Genealogists next year hosts its second ticket-only three-day conference based on the WDYTYA? programme.

The business model for genealogy may initially seem akin to information providers, such as financial information databases, - online information and an e-commerce portal. However there is a key difference.
Searching family history has a strong community aspect, as shown by Genes Reunited’s facility to swap details. In other words successful genealogy businesses give the users a sort of “virtual family”.
Investors are increasingly aware of the potential for these companies, given that a million and a half people are engaged in tracing their ancestors.

More importantly, the results of genealogical research may be useful for organisations involved in the fields of human genetics, genomics, bio-ethics, and bioinformatics. Venture capital firms and other investors are showing increasing interest. Earlier this year Google and US venture capital firms New Enterprise Associates and Mohr Davidow Ventures invested in 23andme, a start-up venture that will allow customers to gain deeper insights into their ancestry, genealogy and inherited traits.

World Vital Records, another US-based site, is reported to have raised around $1.2m from vSpring Capital, Provo Labs and TTP Capital Advisors. Geni.com of the US, which is free to users and funded by advertising, has become the symbol of financiers’ interest in genealogy. The company this year raised $10m in funding from Charles River Ventures valuing it at $100m.

This was a tenfold increase in valuation for Geni, whose first round of financing, led by Founders Fund, was $1.5m, giving a $10m valuation. This has prompted talk of a bubble in genealogy and social networking websites. Advocates of the sector point to Accel Partners’ £12.5m investment in FaceBook in 2005, which looked pricey at the time but was clearly a bargain.

They also point to potential web applications beyond research. It could offer to send birthday cards to family members automatically, buy and dispatch Christmas presents or even form the basis of a family-based eBay-style network.

The real test will be when the first genealogy website opts for a stock market flotation. Many observers, including Fortune magazine, rates The Generation Network (TGN), which includes ancestry.co.uk, as a leading candidate. Such is the pace of change in the sector that, at the time of writing, a private equity firm is reported to have taken a majority stake in TGN for $300m.

It will be fascinating to see whether MyFamily/Ancestry or FaceBook becomes the first social networking site to float. Either way, if investors show a fraction of interest that these websites’ users have shown, their corporate future seems assured.