Some investors are about to get a deal.
Groupon, the fast-growing Chicago startup that dominates the daily-deal category, has filed revised articles of incorporation that give it the right to issue $950 million in shares, according to VC Experts, a site that analyzes corporate filings. And CEO Andrew Mason just posted a confirmation on Twitter that the company is in the midst of raising a new round of financing.
If it raises the entire amount, Groupon could be worth as much as $7.8 billion &8212' a milestone that would leave speechless critics who derided Mason&'s decision to pass up an offer from Google to buy the company for $6 billion.
Interestingly, Groupon&'s new investors appear to be getting better terms than DST, the Russian Internet holding company that invested $135 million in Groupon in April. DST&'s investment was junior to other previous investors, meaning that in a sale, DST would be last in line to recoup its investment. The new investors would be senior to earlier investors, a more usual arrangement, but DST has become well-known in the industry for its willingness to invest in Internet companies like Facebook and Groupon on liberal terms.
While VC Experts initially suggested that DST paid a slightly higher price than Groupon&'s new investors might, that analysis seems to be off, since it doesn&'t take into account a three-for-one stock split that took place in August. If Groupon finds investors at the new valuation, DST&'s shares will have roughly tripled in value since April.
Beyond Mason&'s Twitter post, Groupon did not respond to an inquiry about its financing plans. The company has already bought several imitators overseas, giving it a fast-growing international presence, and could use the money to expand to more cities in the U.S. and abroad. Its business, in which it offers subscribers a daily email with a deeply discounted offer for a local business in their city, requires a large human presence of salespeople, writers, and city planners, and that doesn&'t come cheaply. The return on investment seems substantial, though: Groupon&'s annual revenues are now believed to be running around $2 billion.
Rival LivingSocial recently raised $175 million from Amazon.com, in a deal first reported by VentureBeat. But Groupon has about 80 percent of the market.
Groupon&'s only flaw appears to be shaky technology. Watchmouse, a website-monitoring service, reports that Groupon has experienced more downtime than any other company in the social shopping category.
This report has been updated to include information about Groupon&'s three-for-one stock split.
Next Story: Twitter investor Union Square could be aiming for later-stage deals Previous Story: On the GreenBeat: Trina plans $800 million investment, Tessera loses SoCal Edison contract
Print Email Twitter Facebook Google Buzz LinkedIn Digg StumbleUpon Reddit Delicious Google More&8230'
Companies: Amazon.com, Google, Groupon, Livingsocial
People: Andrew Mason
Companies: Amazon.com, Google, Groupon, Livingsocial
People: Andrew Mason
Owen Thomas is the executive editor of VentureBeat.
VentureBeat has new weekly email newsletters. Stay on top of the news, and don't miss a beat.
Discuss Add this link to... Bury
Comments