Social buying funding heats up as ShopSocially, Groupalia snag millions

Investors interested in grabbing a piece of the white-hot social buying sector threw more money into the space today, as shopping recommendation site ShopSocially announced $1.1 million in first round financing, and Spanish coupon site Groupalia locked down €5 million in its second institutional round of funding.

Today’s infusions are part of a larger trend in investments in startup social media sites that focus on spreading the word about shopping deals.

These sites include “friend meet-up” forums like SocialMedia, or companies like Groupon, that specialize in finding discount deals on everything from luxury brands to restaurant coupons.

Social buying funding and competition among these startups has been increasing worldwide for a couple of years now, but this month has been particularly intense.

LivingSocial, Groupon’s closest competitor, recently surpassed its rival in Web traffic and acquired smaller Boston-based Urban Escapes on Oct. 18 in a bid to expand its offerings to subscribers. It has raised more than $40 million since its founding in 2008.

Spain’s largest online sales club, Privalia Venta, also swooped up a $95 million infusion of financing from Index Ventures and General Atlantic on Oct. 4, giving it total financing of $136 million over the last four years.

So why all the scrambling to get in on what can arguably be called only a nascent portion of online buying overall?

To investors, the attraction these already high-profile buying sites hold is clear. Whether they have established customer bases like Living Social’s 10 million subscribers, or much smaller groups based on friend recommendations like ShopSocially, they are another bite at the e-commerce apple.

These startups are also learning to leverage data from social media networks like Facebook and Twitter into content tailored specifically to a user’s buying preferences. This can then provide metrics about shopping habits that are invaluable to advertisers—and a company’s bottom line.

“Social media is one of the most exciting disruptions for retail since e-commerce,” said Lauren Freedman, president of the e-tailing group, an e-commerce consulting fim, and a 15-year e-commerce industry veteran. “There is no question that online, and perhaps even offline, shopping experiences will be increasingly influenced by social recommendations.”

Groupalia’s funding today came from Nauta Capital, Caixa Risc and previous angel investors Groupalia CEO Joaquin Engel, Lucas Carné and Jose Manuel Villanueva.  Carné and Villanueva are also the founders of Privalia.

ShopSocially received its infusion from Valhalla Partners and angel investors Raman Khanna, Ashish Gupta and Dharmesh Thakker.

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