Living Social Wins a $110 Million Lifeline

Living Social has won a lifeline from some of its existing investors today with a new infusion of $110 Million. The new cash lets the #2 deals company, which has been 31 percent owned by Amazon, proceed after sustaining very large, unsustainable losses. (It isn’t clear whether Amazon participated in the new raise).

The new investment suggests that the investors aren’t ready to toss in the towel yet on an investment once valued at $4.5 Billion. There is, in fact, a lot for Living Social to grow on. Despite the bad press that has accumulated in the space – including a recent round of layoffs — Living Social has been experiencing revenue growth, with a 32 percent increase in 4Q 2012 over 3Q 2012.

The new cash will allow the company to continue its efforts to get to profitability and outgrow its original daily deal business model. Newer lines of business include national deals; curated travel packages and classes; goods; mobile “instant” offers”; and small business services, including loyalty and engagement programs.

Living Social has done especially well with national deals, for instance, and now has a steady base of national offers that it runs. It has also invested heavily in online food ordering services.

For us, the two questions are: how much time does it have before the investors lose patience? And is the company positioned well against newer entrants in the promotions space such as American Express, Google, (and yes..,Amazon.) It is certainly one of local’s biggest bets.

Living Social SVP of National Sales Mitch Spolan, a longtime industry sales leader, is a featured speaker at Leading in Local in Boston March 18-20.

This Post Has 3 Comments

  1. Painters

    Interesting that you use the word “win” in your headline.

    From what I’ve read, the shareholders and employees are far from “winning” with this deal.

  2. KurtisGilbreth

    This market is unproven. There are a lot of investors unlike these that consider this new era as the “Post Groupon Era”. This era is where investors want to see a proven business model before they go investing.

    You are right Painters. The employees and investors are far from “winning” in this deal.

  3. Peter Krasilovsky

    Thanks Painters and Kurtis. I think it is probably a “win” if it keeps the company alive….but I get your point!

Leave a Reply

Your email address will not be published. Required fields are marked *

ten − 8 =

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>