LivingSocial Lands New Money from Old Investors

By Steve Anderson February 20, 2013

A memo to employees released earlier today suggests that LivingSocial has some very big plans for the future, and they start with the completion of an impressive round of funding. LivingSocial, now reportedly the second largest daily deal company around, managed to raise $110 million from its existing investors, proving not only does the company have some impressive plans afoot, but that its investors like the chances of those plans succeeding.

The memo, generated by LivingSocial CEO Tim O'Shaughnessy, detailed the massive fundraising effort, calling it "a tremendous vote of confidence in our business from the people who know us best, our current board members and investors."

While O'Shaughnessy didn't detail just who threw in how much – and whether or not one of LivingSocial's largest investors, Amazon.com, threw in on this round – it was clear that LivingSocial had sufficient pull to raise some money.

LivingSocial had previously raised a substantial sum of money – some reports put it in the hundreds of millions of dollars – in order to pursue the number one slot in daily deals, currently occupied by Groupon. But when Groupon went public and lost about two thirds of its market value, LivingSocial was in a very precarious position.

LivingSocial's own valuation dropped following Groupon's stumbling IPO, which in turn gave rise to big losses and job cuts, at one point sending 9 percent of its work force – about 400 jobs in total –packing.

This in turn yielded unusual forms of fundraising, such as the issuance of preferred stock or dividend-paying shares, moves that can dilute control of the company but also serve as an inducement for investors who find themselves reluctant to invest further in a company in which some of their money has already been lost – sometimes referred to as a "down round."

O'Shaughnessy, for his part, said that the company has "an aggressive roadmap," but wouldn't talk about what specific landmarks, toll booths and intersections were on that roadmap. He did, however, point out that the company has several investments lined up in terms of marketing and technology, as well as an improved focus on mobile technology to provide not only a suitably aggressive expansion, but a shot at productivity.

Indeed, that mobile focus may provide the best chance at recovered fortunes of all. With a deal focus for mobiles, LivingSocial can offer promotions that are geographically targeted, allowing businesses to buy in and offer deals to users who are in the neighborhood.

For instance, let's say a group of friends are out on a bar crawl on a Friday night. All of a sudden, just as the third round of Guinness arrives, one in the group gets a LivingSocial offer on his/her smartphone from the wing place down the street, which is offering quarter wings for the next 50 visitors. The group calls it a perfect opportunity and heads on down, while the business gets a whole new string of business it wouldn't have had without the deal.

That's just one option – there are plenty more hypothetical scenarios to put in play just as well – but it illustrates just how valuable a venture like LivingSocial can be in terms of drumming up business. Will LivingSocial's strategy ultimately succeed? Only time will tell, but the investment in mobile and marketing should prove helpful in the end.




Edited by Braden Becker

Contributing TechZone360 Writer

SHARE THIS ARTICLE
Related Articles

4 Biohacking Facts You Should Know About in 2017

By: Special Guest    8/18/2017

When it comes to biohacking, a more recent development in science, it involves combining the idea of hacking with biology. In today's world, biohackin…

Read More

Rest Your Weary Fingers: Voice Activation is Coming to a CRM Near You

By: Special Guest    8/9/2017

We spend a lot of time talking to our gadgets these days. Whether we're seeking directions from Siri or weather updates from Alexa, speech is quickly …

Read More

Kevin Kennedy Stepping Down, Will New Leadership Help Guide Avaya Back into Prominence?

By: Erik Linask    8/7/2017

After more than eight years as Avaya's chief executive, Kevin Kennedy will be stepping down from that role as of October 1, 2017. He'll be replaced by…

Read More

Micro-CT Scans Allow Researchers to Study Live Insects in 3D

By: Kayla Matthews    8/7/2017

The things we don't know about the natural world could fill textbooks. That's why excitement is the most appropriate response when we discover new way…

Read More

Gogo Making Air Travel More Productive

By: Erik Linask    8/4/2017

Gogo created tremendous hype when it first enabled in-flight connectivity on American Airlines, back in 2008. But, anyone who has used in-flight Wi-Fi…

Read More