Today, Silicon Valley blog TechCrunch is reporting that dating web site HotOrNot has been sold to Canadian company Avid Life Media, "a network of targeted niche brands with highly engaged users", for around $20M.

According to Markus Frind, CEO of free online dating site PlentyofFish.com, Avid Life Media is a front for ashleymadison.com, "a dating site for married people that want to cheat". Is this whole dating space heating up or what?

Just a few monts ago we met with HotOrNot co-founder James Hong at a Churchill Club event where he was telling his amazing story: from humble beginnings to real phenomenon, even inspiring ABC's reality television show, "Are You Hot? The Search for America's Sexiest People".

"We started in October 2000 [...] on borrowed space [...] and quickly realised that it was not going to work out. We almost took the site down because [...] according to our current bandwith consumption this site is going to cost us $100,000 a month and doubling every 5 minutes!", said Hong

Inspite being $60,000 in debts, then students Hong and co-founder Jim Young made a barter deal with IT hosting company Rackspace: "publicity" for a server and bandwith. And I guess the rest is history... with a nice happy ending... even though some find the amount offered too low for such a profitable start-up ($5M/yr, 5M unique visitors per month, 200M page impressions)!

Also check out James Hong video at the Churchill Club after the jump.