Check out all the on-demand sessions from the Intelligent Security Summit here.
Groupon, the Chicago startup that offers group discounts, raised $135 million from Russian investment firm Digital Sky Technologies in a deal signifying that social buying has rapidly matured into a real business.
Part of the investment will go toward cashing out early-stage investors, on top of expanding the company. The round also drew in Battery Ventures.
The new funding marks the company’s explosive rise out of obscurity; Groupon is actually an outgrowth of a three-year old project that was focused on collective action for social change. After a year of trying to figure out a business model for this site, the company’s leadership started experimenting with group buying.
It was a very simple idea: offer people a discount if they sign up for a deal en masse.
And it worked. Groupon has since seen runaway success: It says it has saved consumers about $150 million and plans to be in 100 cities by the end of 2010. That’s not to mention the cohort of its copycats. The company raised a $30 million round in December led by Accel Partners. And now it’s been added to the list of red-hot startups the Russian investment firm DST has dipped its fingers into along with Facebook and Zynga.
Here’s the release:
GROUPON RECIEVES $135 MILLION FROM DST AND BATTERY VENTURES
Investment to Support Rapid Growth of Social Commerce Globally
Chicago/Moscow, April. 19, 2010–Groupon, the leading social commerce site, today announced that DST, a leading global internet investment group, will lead an investment round of $135 million in the Company. A portion of the investment will be used to fuel Groupon’s global expansion, and the rest will be used to facilitate liquidity for employees and early investors.
DST comprises the majority of the investment, with participation from Battery Ventures, which is also a new investor in Groupon.
Groupon leverages group buying and social media to provide its millions of customers big discounts on the best local businesses in more than 50 cities across the United States and in Canada. To date, customers have purchased over four million Groupons on deals ranging from spa treatments and golf outings to fine dining and skydiving and have collectively saved over $150 million on these deals.
“Our growth is a reflection of the positive impact Groupon is having on consumers and businesses at a very early stage of the market development,” said Andrew Mason, founder and CEO of Groupon. “We are very pleased and excited to welcome DST and Battery as shareholders and we look forward to benefiting from their vast knowledge and experience of the social media sector as we continue executing on our growth plans in North America and globally.”
“This investment underscores our view that social networking and community based activity will drive, shape and define the web’s evolution in the years ahead,” said Yuri Milner, Chief Executive of DST. “Groupon, with its strong management team, offering and vision, is pioneering social commerce and is redefining the local advertising space. We look forward to being long-term partners of a company that is on a path to becoming a global Internet leader.”
“We’ve followed the social commerce phenomenon for many years, and are thrilled to have the chance to back such a visionary management team,” said Roger Lee, General Partner, Battery Ventures. “They saw a massive opportunity very early, and have executed flawlessly to define it and take the leadership position. We think there is a lot of runway ahead, and are energized to support the team in their quest.”
Founded in November 2008, Groupon has been aggressively expanding to cities throughout the United States, with plans to be in 100 cities by the end of 2010. Earlier today Groupon announced that it has launched its service in Orlando, Fort Worth, Tucson and Toronto, its Canadian city.
VentureBeat's mission is to be a digital town square for technical decision-makers to gain knowledge about transformative enterprise technology and transact. Discover our Briefings.