Foursquare may be grabbing headlines in recent weeks, but Groupon sure has more cash. The 17-month-old social commerce firm has announced $135 million in funding led by Russian investment firm Digital Sky Technologies (DST).
Groupon will use the funding to expand its presence globally while cashing out early investors and employee shares. While the company’s past online marketing efforts have leaned on search, Facebook ads, and affiliate programs, the brand was tight-lipped when asked about how the money could also potentially lead to heightened customer-acquisition efforts in the digital space.
“It will be definitely used to expand,” said Julie Mossler, spokesperson for the Chicago-based firm. “Paid advertising could be a part of that.”
Increasing paid search efforts via Google, Bing, and Yahoo might make the most sense when it comes to the nature of Groupon’s offers. It uses collective buying power to land and resell sizable discounts/coupons for trendy restaurants, entertainment events, and various other kinds of consumer offers like beauty spas. The site offers a new daily deal for each of its 50 cities of operation.
A current Google search for “restaurant deals” results in the top sponsored link for the brand. People who click through the ad are taken to a landing page that includes meal offers for their locale. For instance, New Yorkers will receive offers for dining spots around Manhattan, while small-town dwellers of southern Rhode Island will get discounts for establishments in nearby Providence.
Waltham, MA-based Battery Ventures joined DST in the most recent round of funding for Groupon. Another $30 million in December came through a measure led by Accel Partners, which followed $4.8 million from New Enterprise Associates in 2009.
While social media industry watchers have recently obsessed about whether another shooting star in the social space – Foursquare – will take Yahoo’s big buy-out offer, Groupon’s new round of funding almost assures that its profile will be raised higher than the brand has seen in its young history. The company is reportedly profitable, valued at $1.35 billion by its new investors, has four million subscribers and employs 250 people.
According to a recent TechCrunch post, Groupon is generating profit of at least $1 million per week and will hit $350 million in revenue this year. If it remains independent and continues to grow at such a rapid pace, chatter about an IPO may not be far off.
When asked what the future may hold for the brand, Mossler said, “All I can say is that we are concentrating on improving our product and that there are no immediate plans to go public.”
You can follow Christopher Heine on Twitter at @ChrisClickZ.
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