Sat, Jan 01, 2011 - Page 10 News List

Local deals Web site Groupon raises US$500 million


Groupon Inc, the fast-growing Internet startup that offers local deals and discounts to members, has raised US$500 million of the US$950 million it is planning to collect in its latest financing round.

The Chicago company said in a regulatory filing on Thursday it plans to use up to US$344.5 million of the proceeds to buy back shares from existing shareholders, including founder and CEO Andrew Mason.

Groupon raised the money just a few weeks after Google Inc’s attempt to buy the two-year-old company for a reported US$5 billion to US$6 billion fell through. If it hadn’t, it would have been Google’s largest acquisition.

Previous funding — US$135 million — came from Group, also known as Digital Sky Technologies, a Russian Internet investment firm that also holds a stake in Facebook.

Groupon employs about 3,000 people, about 1,000 more than the much-larger Facebook. Most of these people work in sales, dealing with local and national merchants who set up discount deals. This has some analysts questioning how easily Groupon can grow its business, since it needs to hire a lot of salespeople to set up deals.

Groupon’s more than 35 million subscribers receive e-mails or posts on their Twitter or Facebook pages about daily bargains in their region. The deals only become active if enough people sign up for them, to make it worthwhile for the businesses.

Groupon did not say who the investors were that took part in its offering, only that there were 33 of them. Venture capital data provider VC Experts estimates that if Groupon raises the full US$950 million, it will be worth about US$6.4 billion total.

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