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Grotech raises new $225M fund for early stage tech

Monday, May 13th, 2013

Grotech VenturesVienna, VA-based Grotech Ventures, which invests in early stage tech firms, has raised a new $225 million fund. The fund was oversubscribed by more than 10 percent, and was raised from both existing and new investors. GV II bringsGrotech’s total capital under management to $1.3B across all funds.

Frank Adams, the firm’s managing general partner, told PE Hub that raising the fund took 20 months because institutional investors were “slow and methodical in their due diligence process, more so than in the 29 years we’ve been doing this.”

Grotech Partner Don Rainey tells the TechJournal that the company is investing in Mid-Atlantic and Mid-West early stage IT firms in Enterprise and infrastructure software, social and cloud computing, security tech, consumer Internet, ecommerce, and energy and healthcare It.

Includes Charlotte, Atlanta, RTP

For Grotech, Mid-Atlantic includes the Carolinas and Atlanta, Rainey notes. Adams told PE Hub the company is spending a good deal of time in Atlanta and Charlotte, NC, for instance, developing deep relationships.

Rainey says that while parts of the social sector are crowded and the opportunity has passed, “There is still a lot of greenfield in it.”

Grotech typically invests the first institutional money a startup raises and continues to invest as the firm grows. Its strategy includes forming top-tier industry syndicates with other investors. It generally invests from $200,000 to $20 million in startups, although initial investments tend to be smaller.

Grotech, which has offices in Virginia, Maryland and Colorado, has already made 12 investmetns from the new fund and continues to invest from its current fund, which has performed well.

We asked Rainey if its harder for tech startups to get that first investment these days.

Don Rainey

Don Rainey

“For top tier entrepreneurs its about the same,” he says. “For the next tier that isn’t as obvious as a backable startup, it’s tougher. If you’re the guy or gal who sold your last company for $500 million and you’re doing another raise for a new company, you can expect the processs to be about the same as it was two, five, or ten years ago.”

Successful exits

It recently secured a major exit with NexGen Storage, which Fusion-lo Inc. acquired in April for about $119 million in cash and stock.

It’s largest exit so far was from the DC-based daily deals site LivingSocial. It led the company’s $5 million Series A round and has since sold chunks of its stake to Amazon, Lightspeed Venture Partners, T. Rowe Price and other buyers for more than $200 million.

Overall, Grotech’s last $109 million fund, which closed in 2009, has a current IRR of 70 percent. — Allan Maurer

New online tools help hotels, but daily deal sites may not be best

Wednesday, April 4th, 2012

TravelClickDespite the immense popularity and relative newness of flash sale websites such as Groupon, BloomSpot, JetSetter and Living Social, the jury is still out on the effectiveness and real value of these sites for a hotel’s marketing plan.

According to a recent survey from TravelClick, a leading global provider of revenue generating solutions for hoteliers, 40 percent of the approximately 900 global hoteliers surveyed have used a flash sale website.  Of the 40 percent who have tried these sites, 38 percent have found it less successful than they had hoped and do not plan to use again.

Hoteliers believed that the sales gave up too much revenue to the site operator (25 percent), did not attract the right caliber of customer reflective of the brand (21.7 percent) and did not see enough return business from the promotion (21.7 percent).

Nearly 40 percent (36.9 percent) of those surveyed have not tried a flash sale promotion and have no interest in executing one in 2012, while 23 percent say that they will try a flash sale site for the first time this year.  When asked which flash sale website hotels chose to use, the majority (53.3 percent) of hoteliers polled had partnered with Groupon.

Flash sales have benefits & risks

“Flash sales can drive considerable demand during low occupancy periods; however, there are many benefits and risks to this approach that require hoteliers to first weigh all viable distribution options.

Compared to other channels, flash sales can provide a quick lift in room growth in a short time.

However, most flash sales carry a high distribution cost due to steep discount and commission requirements,” said John R. Hach, TravelClick’s senior vice president, Global Product Management.

“Hoteliers must remember that using the right tools, at the right time, and developing smart promotions will not only fill immediate occupancy needs but also enable them to build direct relationships with potential customers for the long term.”

TravelClick Best Practices for Filling Low Occupancy Periods:

  1. Global Distribution System Marketing (worldwide computer network)– GDS Advertising offers the unique ability to target prospective guests based on reservation trends specific to arrival date.
  2. Retargeting — Retargeting allows hoteliers to target potential customers, through online ads, who visited their website but did not book a room
  3. Opaque Online Travel Agencies — Running promotions on opaque OTAs enables hoteliers to move inventory at a deep discount but keep the brand intact because the name of the hotel is not made available until after the promotion is booked

Hach concluded, “The good news is that more and more online tactics are being developed to help hotels fill rooms during low occupancy periods.  However, it is imperative that hoteliers don’t get caught up in the hype and keep their eye on executing high-impact activities that achieve measureable results.”

Electronics top consumer shopping want lists, deal sites popular

Tuesday, February 28th, 2012

Shopping cartMore than 51 percent of consumers plan to spend the same amount of money in 2012 as in the previous year, according to a 2012 Shopping Outlook survey conducted by PriceGrabber, a part of Experian.

Other findings show that electronics tops many shopping lists and deal sites, particular for dining bargains, are popular.

While more than half of the survey respondents plan to spend the same amount of money as they did last year, 21 percent indicated they plan to spend more, and 28 percent plan to spend less.

Conducted from Jan. 26 to Feb. 13, 2012, the survey includes responses from 933 U.S. online shopping consumers.

Better discounts, confidence in the economy are reasons to spend this year
When those who plan to spend more were asked to select all of the reasons why, 36 percent cited confidence in the economy, and another 36 percent said that they expect retailers to offer better discounts this year.

Thirty percent indicated that they are earning more money in 2012, 6 percent said that they are tired of being frugal, 5 percent cited a credit limit increase, and another 5 percent have found employment in the past year.

When the respondents who plan to spend less this year were asked to select all of the reasons why, 40 percent cited increases in prices such as gas, food and necessities; 34 percent said lack of confidence in the economy. Twenty-nine percent indicated they were making less money this year, and 16 percent said they overspent during the 2011 holiday season.

“Our data shows that shoppers plan to remain optimistically cautious with their spending again this year and expect retailers to continue to offer deals and incentives on products,” said Graham Jones, general manager of PriceGrabber.

“We expect retailers will continue to roll out a number of tactics, such as free shipping, larger discounts and online-only promotions to help win the consumer dollar this year, while implementing strategies that will span brick-and-mortar, online and mobile shopping platforms to entice consumers to shop.”

Electronics and clothing top shopping wish lists for 2012
When consumers were asked to select all of the items and activities on which they plan to spend more in 2012, more than half said consumer electronics and clothing, followed closely by travel and vacations, household supplies and dining out.

Twenty-nine percent said they will spend more on furniture, books or DVDs, followed by jewelry, toys, events, sporting goods and fitness memberships.

Daily deal sites increase in popularity; most will search for food and dining
The daily deal industry looks like it will remain strong in 2012. Forty-six percent of PriceGrabber survey respondents indicated that they plan to use daily deal sites, such as Groupon, Living Social or PriceGrabber’s local deals category, more often in 2012 than in 2011.

When consumers who plan to use these sites more frequently were asked to select all of the categories they will search the most, 53 percent said food and dining, 46 percent said shopping, 42 percent said entertainment and events, and 34 percent said family and kids.

Most consumers will combine online, brick-and-mortar and mobile shopping
When asked how they plan to shop in 2012, 45 percent of PriceGrabber survey respondents said they will combine online, brick-and-mortar and mobile shopping. Forty-two percent said they will shop mostly online, 12 percent will shop mostly in brick-and-mortar stores, and 1 percent will shop primarily from a mobile device.

According to the survey, the average shopper will make 53 percent of his or her overall purchases online, 42 percent from brick-and-mortar stores and 5 percent from a mobile phone.


Nearly 800 daily deal sites bit the digital dust the last 6 months

Thursday, January 19th, 2012

GrouponIs this good news for LivingSocial and Groupon or bad? It seemed as if a new daily deal site popped up every week last year, but many bit the digital dust in the second half of last year.

Daily Deal Media says that 798 daily deal sites closed up shop in the last six months. The total number of sites globally fell 7.61 percent in that period.

While Europe and Latin America saw increased numbers of daily deal sites (235 in Europe, 324 in Latin America), Asia lost a whopping 1,348 such sites.

But a survey of companies that used daily deal sites last year found that 35 percent had profitable deal offers and only 16.5 percent were unhappy with their deals.

We’ve said right along that the daily deal site space is going to see attrition and consolidation with only a few larger players likely to survive. But attrition is obviously taking more of these me-too sites than acquisitions.

A consumer poll found that 39 percent of 60,000 surveyed had never signed up for a daily deal program, so there is room for growth.

What do you think? Is the daily deal business sustainable?

Bargain hunting last minute holiday shoppers turning to daily deal sites

Wednesday, December 14th, 2011

PricegrabberFollowing a blowout Black Friday/Cyber Monday shopping weekend, many consumers will continue to hit the stores through the final days leading up to Christmas, according to survey data from PriceGrabber, a part of Experian.

Results from PriceGrabber’s fourth winter holiday shopping survey reveal that 41 percent of consumers plan to shop between Dec. 21 and Dec. 24 for holiday gifts.

This data comes on the heels of a successfulThanksgiving weekend for retailers, during which PriceGrabber experienced a 15 percent increase in site traffic compared to 2010. Conducted from Nov. 17 to Nov. 30, 2011, the survey includes responses from 13,472 U.S. online shopping consumers.

Many last-minute shoppers are hunting for bargains
When those consumers who plan to shop at the last minute were asked to select all of the reasons why, 43 percent said that they believe the best discounts can be found during this time period.

Another 43 percent of consumers indicated that they are busy and unable to finish their shopping earlier, 26 percent admitted to procrastinating, 22 percent believe it is fun to do last-minute shopping, and 10 percent are waiting for a year-end work bonus to begin shopping.

“After observing the increase in activity and sales of the Black Friday and Cyber Monday shopping season this year, we expect to see a significant percentage of consumers seeking to prompt retailers to offer additional savings throughout December,” said Graham Jones, general manager of PriceGrabber.

“Savvy shoppers saw retailers rolling out discounts as early as the week before Thanksgiving this year, and they are staying on top of last-minute incentives that are certainly on the horizon in the coming weeks.”

Consumers will buy a combination of high- and low-price-point items
When asked what type of gifts they plan to purchase at the last minute, 53 percent said they intend to purchase both big- and small-ticket items, 31 percent will buy only small-ticket items (under $100); 10 percent will purchase all of the holidays gifts on their list, and 6 percent will buy only big-ticket items (over $100).

More men will delay holiday shopping until January
While most consumers plan to complete their holiday shopping before Dec. 25, PriceGrabber’s survey found that 9 percent will wait until January to purchase holiday gifts. Men and women differed in their plans, with 11 percent of men saying they will wait until January to buy gifts and only 8 percent of women planning to do so.

When those consumers who will delay their holiday shopping until January were asked to select all of the reasons why, 68 percent said that they believe sale prices are best in January, 27 percent plan to use gift money received during the holiday period, 24 percent simply prefer shopping in January, and 11 percent plan to wait for a year-end work bonus to make purchases.

Daily deal sites begin to make mark on last-minute shoppers
According to PriceGrabber’s survey, a notable percentage of shoppers are turning to daily deal sites for great last-minute prices, with 27 percent indicating that they plan to shop for last-minute gifts on sites such as Groupon and LivingSocial.

Those consumers who plan to use daily deal sites will do so largely in hopes of finding a bargain.

Fifty-eight percent of respondents indicated they are trying to save money on gifts and like the discounts available through daily deal sites; 22 percent enjoy the great holiday deals on local services in their area; 13 percent said they liked being able to share great deals with family and friends, especially during the holiday season; 4 percent prefer to give experiential gifts and believe local deal sites offer the best options; and 3 percent are intrigued by the hype around local deal sites.


LivingSocial closes $176M round; Siri’s future; xxx domain name rush, more

Thursday, December 8th, 2011

LivingSocialLivingSocial, the DC-based daily deal site that is the second largest player in the space after Groupon, has raised $176 million in new funding, according to a filing with the U.S. Securities and Exchange Commission.

JP Morgan, Lightspeed Ventures and participated in this round, which Venture Beat reports is the first tranche of a $400 million raise.

The company has raised a total of $808 million. It has spent about $353 million to acquire, TicketMonster and Urban Escapes.

It delayed a planned $1 billion initial public offering of stock earlier this year.

LivingSocial presented at TechMedia’s 2009 Southeast Venture Conference (SEVC). The next SEVC is coming up in Tysons Corner, Va, Feb. 29-March 1.

New xxx domain names selling fast

ICM Registry sold more than 55,000 xxx domain names in a matter of hours, with a total of 159,000 plus sold by noon yesterday.

Many of the domain names will not be adult sites, but rather were registered by non-adult firms to prevent adult sites from sullying their brands.

Amazon launches $6M fund for indie Kindle authors

Amazon has started a new fund called KDP select, with $500,000 available for December to encourage authors to publish works exclusive on the Kindle for 90 days.

Russ Grandinetti, vice president of Kindle Content said,“By choosing KDP Select, independent authors and publishers have an opportunity to make money in a whole new way and reach the growing audience of Amazon Prime members, for KDP Select authors, and we hope to add more such tools over time.”

After the 90 days, the books will then go to the Kindle Owners Lending Library, which allows users to check out books for free, although Amazon will pay authors a fee. The Kindle lending library has stirred up some controversy among authors’ groups and publishers, but that’s nothing new for Amazon.

All this comes on the heels of Amazon’s quite successful launch of its 7-inch tablet, the Kindle Fire, which reports say may already be second to the iPad in tablet sales. We wonder if that will continue to hold true as other inexpensive tablets hit the market, such as the new one announced by MIPPS Technology.


The year of daily deals firms: acquisitions, consolidations, dead (infographic)

Wednesday, December 7th, 2011

It has been quite a ride for companies in the daily deals space this year. For a look at just how volatile the space has been, 8 coupons created this infographic:

Click here for a larger version

Daily Deals infographic (small)

Groupon IPO raises $700M, largest Internet IPO since Google

Friday, November 4th, 2011

GrouponGroupon, (Nasdaq:GRPN) the Chicago-based daily deal site increased the size of its initial public offering of stock by 5 million to 35 million shares it sold at $20 each – above its initial $16 to $18 range, to raise $700 million in the largest IPO for an Internet company since Google in 2004.

Groupon’s shares soared 42 percent in mid-day trading to $28.45 at around noon. That price puts its market value at $17.8 billion.

Reuter’s reports that the company’s low “float” helped boost demand for its shares. It is selling just 4.7 percent of its shares, one of the lowest percentages of IPO shares offered in ten years.

The IPO is among the most anticipated of recent years.

Groupon is the leader in the daily deal business, which has spawned a host of imitators and competitors, including DC-based LivingSocial and many regional firms.

See also:

Groupon taps Silicon Valley Bankers to defy expectations









Online shoppers increasingly rely on product reviews, social media

Monday, October 3rd, 2011
Scot Wingo

Scot Wingo, CEO, ChannelAdvisor

“If you build it, they will come” no longer works for online retailers:  heading into the holiday shopping season, a new survey reveals that active online shoppers increasingly rely on online product reviews as a key element in their buying decisions.

The survey also found they’re increasingly interacting directly with vendors through social media sites like Facebook and Google+, and shows that deal sites such as Groupon and LivingSocial soared in popularity.

The fourth annual Global Consumer Shopping Habits Survey was conducted by ChannelAdvisor, a global e-commerce platform provider that enables retailers to sell more across online channels. The survey included responses from participants throughout North America, Europe and Australia.

With the global economy in a continued weakened state, the company noted that consumer preferences are more important than ever for retailers to take into account as they work to stay profitable during the all-important holiday season and beyond.

Peer-based product reviews are one of the most important factors in the buying decisions of online shoppers, according to the ChannelAdvisor survey.  Ninety percent of shoppers around the world who answered the survey said they read product reviews from other shoppers before buying, with 83 percent saying the reviews affect whether they actually purchase an item.  In the United States alone, almost half of the respondents (48 percent) said they have posted an online review as well.

“Consumers are increasingly diversifying the places they shop online, which is reflected within this survey and further highlights the need for retailers to expand their reach on every e-commerce channel, including mobile and social,” said Scot Wingo, ChannelAdvisor’s chief executive officer.

“The development of emerging channels within the past year is staggering, supporting our belief that these channels are more than just passing trends. The survey reveals how influential social networks have become, as well as their potential to drive e-commerce moving forward.”

Customer sentiment has increasingly migrated as well to social media sites in the last year, with more than half (53 percent) of those responding to the survey saying that product comments posted to retailers’ Facebook and Twitter pages play a role in their buying decisions.

Increasingly, those retailers are aware of the sites’ growing importance in their efforts, and are seeking to engage potential and existing customers online; the survey indicates their efforts are taking hold.  More than one-third of the respondents (34 percent) said they have become “fans” of retailers on Facebook; that number is much higher in the United States, where 46 percent said they have done so.

In addition, 83 percent said they are likely to visit a retailer’s website if it’s been recommended by a Facebook friend.

Other findings from the ChannelAdvisor survey include:

  • Google continues as the clear number-one choice globally among online shoppers as a starting point for product searches;
  • Purchases made via mobile phone have more than tripled in the past year, to 31% of those responding to the survey (but online shoppers say using tablet computers, like the iPad, is far easier);
  •  Thirty percent of shoppers worldwide say they are using barcode scanning applications (like eBay’s RedLaser) as an element in their buying decision; and
  •  “Deal of the day” sites, like Groupon and LivingSocial, have leaped in popularity, with about half of all respondents in the United States saying they use both sites frequently.

A copy of the survey results is available for review at

Daily deal sites lost significant traffic in August

Friday, September 30th, 2011

GrouponFor the second month in a row, daily deal sites adn LivingSocial saw significant declines in traffic, while,, and unsurprisingly,, all saw major traffic increases, acccording to Kantar Media Compete.

Compete ranks the 250 top websites monthly. This month’s results:

Daily Deal Leaders Drop in UVs for Second Consecutive Month
Perhaps in part due to market saturation and deal fatigue, the daily deal category’s definitive leader,, dropped 28.6 percent month-over-month (M-O-M) to 21.9M unique visitors (UVs). Despite its two-month downward trend, however, the site still shows impressive 164.9 percent year-over-year (Y-O-Y) growth. attracted 10.15M UVs in August, a 4.25 percent fall M-O-M, but a 96.02 percent rise Y-O-Y.

Facebook Gives Twitter a Boost
In August, and both scored all-time high numbers of UVs for the second straight month. Facebook hit 155.8M UVs (up 3.97 percent M-O-M, up 22.12 percent Y-O-Y), while Twitter rose 12.68 percent M-O-M to reach 36.5M UVs, a 27.57 percent improvement over last August.

“As both of these booming platforms wrestle with monetization and developing the optimal approach to incorporating advertising into social networking, marketers should watch the sites’ monthly metrics and referral traffic carefully to help determine if, where and/or how their brands should advertise in social,” said Michael Perlman, managing director, financial services and online media & search at Compete.

In August, received 26.6 percent of its traffic via — more than from Google and Yahoo combined! Of Twitter’s outbound referrals, 22.74 landed on Facebook. Conversely, only 0.37 percent of Facebook’s incoming traffic was referred from Twitter. A mere 1.22 percent of Facebook’s outgoing referrals were to Twitter. Celebrates VMA Anticipation and the Return of Jersey Shore was among the fastest-moving sites on Compete’s Top 250 list in August. Monthly UVs leapt to 12.8M, a 45.8 percent M-O-M increase and a 24.9 percent increase Y-O-Y. Factoring into this success were the season four Jersey Shore premiere on August 4 and the 2011 MTV Video Music Awards on August 28.

Traffic referrals from Facebook accounted for nearly 14 percent of’s traffic in August. On the outbound end of things, almost 19 percent of visitors made their next web destination. Benefits from Fantasy Football, home of the National Football League, shot up to 9.8M UVs in August, translating into a monthly spike of 114.36 percent and a Y-O-Y increase of 18.96 percent. Although the official season didn’t start until September, the site drew in scores of visitors with its fantasy offerings. subdomain jumped 309.82 percent for the month.

One to Watch:, a “community-specific news and information platform,” hit number 208 on Compete’s Top 250 list in August, garnering 6.78M UVs — a 17.8 percent increase for the month and a 1193.1 percent leap from the site’s standing in August 2010.



LivingSocial may delay IPO plans; GrubHub grabs $50M; Facebook changes

Thursday, September 22nd, 2011

LivingSocialDC-based LivingSocial, Groupon’s largest competitor, may delay plans to file for an initial public offering of stock and take a new $200 million financing round instead, according to Bloomburg, which sites anonymous sources.

The round would value LivingSocial at $6 million and might include equity and debt the report says. It has raised $632 million in backing so far.

The company was discussing a potential IPO of more than 10 billion, but a delay may be prudent in the current volatile market for both it and Groupon.

Jon Carpenter, Director of Marketing, LivingSocial, will be at TechMedia’s upcoming Digital East conference in Tysons Corner, VA, Sept. 28-29.

GrubHub grabs whopping $50 million for mobile restaurant ordering service

GrubhubCHICAGO -GrubHub, a web and mobile service that connects diners to restaurants and simplifies online ordering for delivery and pick up, has raised $50 million in Series E funding to aggressively focus on its mobile development and acquire New York-based Dotmenu, the parent company of Campusfood and Allmenus.

This Series E funding is led by Lightspeed Ventures with Mesirow Financial, Benchmark Capital, Greenspring Associates and DAG Ventures participating. Terms of the acquisition will not be disclosed.

“Since starting GrubHub with my partner Mike Evans in his apartment in 2004, we’ve sent over $200 million in delivery and pick up orders to independent restaurants across the country,” said Matt Maloney, GrubHub co-founder and CEO. “With our unwavering focus on providing the best service to diners and the most efficient technology to restaurant owners, we have grown to become the leader in the online ordering space.

“It is precisely for this reason that we are acquiring Dotmenu. Dotmenu has shown great expertise in servicing the college market, and by combining our extensive networks, we will become the foremost resource for diners and restaurants for their online ordering needs.”

The Series E and Dotmenu acquisition comes just six months after GrubHub raised $20 million in funding led by DAG Ventures. The funding rounds, coupled with the acquisition, strengthen GrubHub’s position as the category-defining leader in the industry.

Largest restaurant listing in the country

Through the acquisition, GrubHub will have the largest restaurant listing in the country with 250,000 restaurant menus in over 50 major cities and countless college towns across the US. The two companies are projected to send over $225 million in combined order revenues to independent restaurants in 2011, and will continue together to achieve more aggressive growth in the years to come.

“GrubHub has a strong presence in the top US markets,” said Michael Saunders, Founder and President of Dotmenu. “This, combined with our network across more than 300 college campuses, allows us to build upon the strong relationship we have with our diners long after they graduate. The acquisition will enable us to make an immediate impact on our restaurants by sending more orders their way.”

GrubHub is free for diners who order and pay for their meals with cash, credit or PayPal. Restaurants pay commissions for each online order they receive from GrubHub, and every order is supported by GrubHub’s 24/7 customer service. Restaurants that do not currently partner with GrubHub can still list their telephone numbers and menus for free.

Visitors to the site or mobile users enter their address to see every local restaurant that delivers to them. Diners can view menus and coupons, read reviews and order for free online, by phone or through the GrubHub iPhone and Android apps.

There are more than 300,000 delivery and takeout restaurants in the country. On average, GrubHub users order out more than 10 times a month and over 22 percent of GrubHub’s revenues come through mobile orders. Pickup and delivery are the fastest growing segments in the restaurant industry, which is one of the largest sectors of the U.S. economy. With more people searching for restaurants and ordering food on-line and through smartphones, the opportunity for continued growth is substantial.

Facebook changes

Facebook CEO Mark Zuckerbergy disclosed huge changes to the social network, which he says now has a record billion visitors a day.

They include a new feature called Timeline, which curates news, apps and visuals. The feature, which sorts content with an algorithm.

While Zuckerberg and Facebook made a lot of hoopla over the Timeline changes to users’ profiles, it is sure to stir up more controversy among users, who have been notoriously unfriendly toward the continual alterations Facebook makes to the site.

The company also added a lightweight status steam called “Ticker.”

One user told us recently, “They just don’t know how to let it alone.”

On the other hand, perhaps it will quell the Facebook fatigue that more than a few of our friends show signs of experiencing.

Here’s a video showing an overview of what Timeline looks like:

Daily deal sites growing in popularity, have untapped opportunities

Thursday, September 15th, 2011

GrouponDespite recent news reports questioning the long-term viability of daily deal companies, a new study from researchers at Rice University and Cornell University shows that the companies are more popular than ever among consumers.

“The key finding is that there is no evidence of waning interest among consumers of daily deal promotions,” said Rice University’s Utpal Dholakia, co-author of “Daily Deal Fatigue or Unabated Enthusiasm?” “In fact, the more deals purchased by an individual, the more enthusiastic they seem to be.”

That’s really good news for Groupon which will likely go ahead and launch its initial public offering of stock in late October or early November, according to the New York Times. The company had delayed its IPO plans due to volatile market conditions for the IPO, which could value the company as high as $30 billion.

Dholakia, professor of management at Rice University’s Jones Graduate School of Business, and Sheryl Kimes, professor of hospitality management at Cornell University, examined consumer perceptions of promotions for nine daily deal companies: Groupon, LivingSocial, Travelzoo, Gilt City, OpenTable, BuyWithMe, ScoutMob, eversave and The researchers surveyed 973 respondents in August; 655 were daily deal users and 318 were not.

Good news for daily deal companies

Dholakia said the study is good news for daily deal companies, who have been hit hard in recent weeks with reports of the industry’s decline. Even previous research by Dholakia found that not enough businesses are coming back to daily deals to make the industry sustainable over a long time.

The new study shows significant opportunity for growth among consumers, as only 16.7 percent of the research panel’s population has used daily deals before, and the majority of non-users (90.6 percent) haven’t bought a deal because of awareness or access issues.

“We see significant further opportunity for trial and use of daily deals by current non-users,” Dholakia said.

Overall, daily deal customers tend to have little interest in being seen as different or “fringe” in their shopping patterns, are not very careful with their personal finances and do not think about spending issues all the time. They are interested in trying new products and services to have new experiences to talk about and influence others. They are attracted to a deal because it is a deal, and are likely to be less sensitive to the actual terms of the offer made by the merchant.

“All of these psychological characteristics indicate that the underlying motivations for purchasing daily deals are complex and multifaceted, having to do with more than just saving money,” Dholakia said.

The study brings into question one of the basic beliefs held by most in the daily deal industry. “There is a theory that consumers must be offered ‘deep’ discounts (50 percent or more) to be interested in daily deals,” Dholakia said.

“Our research shows that a significant number of consumers will continue to buy the deals even if the discounts are slightly smaller. This is a significant finding because my previous research showed that businesses find huge discounts to be unsustainable. The industry seems to be operating under the opinion that deep discounts are the only way to be successful, but that’s not the case.”

The study was funded by the Cornell Center for Hospitality Research and Rice University.

Read the complete new study and previous research papers by Dholakia on daily deal sites.

GoSteals offers businesses free daily deals, Tremor Video, Apsalar funded

Tuesday, September 13th, 2011

Tremor VideoNew York-based Tremor Video, the largest independent online video technology company, has successfully raised a $37 million round of financing. New York City-based W Capital Partners led the round, which also includes the participation from Keating Capital, Canaan Partners, Draper Fisher Jurvetson Growth, General Catalyst Partners, Meritech Capital Partners, Singapore’s EDBI, Time Warner and SAP Ventures.

Having acquired ScanScout and Transpera in the past year, Tremor Video has extended its market leadership in the interactive video space and reaches more consumers than any other online video advertising company (according to comScore).

“We invest in companies that are leaders in rapidly growing markets, and this is no exception,” said Bob Migliorino, Managing Director of W Capital Partners. “Tremor Video’s performance in the fastest growing segment in online media, combined with Video Hub’s game-changing technology, makes us extremely happy to be working with them.”

Monitor realtime key factors

With the launch of Video Hub in May of this year, Tremor Video has radically changed the network model by enabling brand advertisers and their agencies to monitor in real time the key factors that are driving their campaign performance. VideoHub analyzes numerous video signals and determines which factors are the most important in delivering campaign success, with particular emphasis on the criteria that drive engagement and brand lift.

Based on Tremor Video’s SE2 technology, Video Hub provides marketers with insight into which environments enhance their brands, what provokes viewer engagement, and why a campaign is successful. Tremor Video plans to continue investing in the continued development and market adoption of Video Hub. It will also use these funds to explore additional acquisitions and expand into fast growing markets internationally.

Apsalar nabs $5M for mobile analytics & behaviorial targeting

San Francisco-based Apsalar, a mobile analytics and behavioral targeting platform for iOS and Android apps, today announced it has closed a $5 million round of funding led by Thomvest Ventures. Apsalar plans to use the new funding to grow the development team, expand its product portfolio and ramp up sales and marketing efforts.

The funding includes participation by Thomvest Ventures, Battery Ventures, DN Capital and existing investors. The new round of funding comes on the heels of Apsalar’s $800,000 seed funding in late 2010 from 500 Startups, Mark Goines, Morado Venture Partners, Founder’s Co-op and Seraph Group. Don Butler, managing director at Thomvest Ventures joins Apsalar’s board of directors.

Apsalar’s comprehensive mobile analytics and behavioral targeting platform gives developers and publishers the tools to understand how their apps are used and to identify and deliver personalized content and offers to their most valuable users.

GoSteals offers free daily deals marketplace for businesses

GoStealsLaunching this week at DEMO Fall 2011, GoSteals is a 100% free platform for every business and consumer worldwide to make daily deals. Built on top of the world’s largest mission-critical web services platform from Mediaspectrum, GoSteals is a self-service business model for the daily deal marketplace.

GoSteals empowers small businesses with a fully automated, self-service portal for managing the entire daily deal lifecycle. Within five minutes, merchants can log-on and structure their deals to advertise. That’s five minutes, to gain free exposure and new customers while keeping all the revenue generated in the process.

Merchants create and schedule their deal, maintaining complete and instant control throughout the entire deal life cycle. GoSteals provides them with real-time information on how many customers have reserved the deal. It even automates customer tracking by providing a unique 2-D bar code on every deal voucher

It’s not just local businesses that benefit. GoSteals is free for consumers as well. They can reserve — or “steal” — any deal they want at no cost. No upfront payment is required. They pay only when they actually cash it in at the participating business. If they don’t use it, they lose nothing. There is no risk involved, only the opportunity for extreme savings.

One of the primary drawbacks of daily deals for businesses is that the daily deal firms take significant cuts of every transaction on top of whatever usually significant discount is offered. Some researchers have questioned the sustainability of the daily deals model.

GoSteals launches this week in 15 core markets globally, with plans for universal reach within 60 days.

What’s the deal with Daily Deals? (Infographic )

Monday, September 12th, 2011

It seems as if a new daily deal site pops up just about as often as their persistent emails pop into our email boxes. While the major players such as Chicago-based Groupon and DC’s LivingSocial have raised more than a billion in venture backing, literally hundreds of smaller regional and niche firms are also fighting for portions of the daily deal meal.

(See: Daily Deal sites grabbed more than $1.69B in funding, 22 financed the last 6 months).

Venture interest in digital daily deal firms may be high, but some researchers have questioned whether or not the business is sustainable over the long term. See: Daily Deal Sites May not have a Sustainable Business, research suggests).

Lab42 asked 500 daily deal users which sites they use much, how often they look, and how much money they spend to produce this “What’s The Deal” infographic:

daily deals infographic

Should your business use deal sites such Groupon?

Friday, September 2nd, 2011

GrouponIt seems like everyone these days uses coupon sites like Groupon for everything from dining to vacations to laser hair removal. These sites can be an interesting new way to get the word out about one’s business to thousands of people. For business owners looking to promote their company or product, the growing number of locally-oriented coupon sites can be daunting.

Small business owners considering using coupon sites to promote their business might want to check out the Business Finance Store’s blog post “Coupon Sites: Deal or No Deal?.”

Also: Daily Deal sites may not have a sustainable business

The Business Finance Store raises a few issues to consider when choosing a coupon site to promote one’s business. While it may seem easy to advertise a coupon on a website, knowing a few things issues before getting started will be immensely helpful to small business owners.

Coupon sites have the potential to improve a company’s business. However, success with coupons and deals requires finesse and good communication. Read about a few things business should think about before using coupon sites at the Business Finance Store’s blog.

The Business Finance Store is a business financing and consulting firm that offers customized Business Financial Solutions. Seasoned professionals offer assistance in a variety of financial solutions to help small businesses succeed such as: Business Financial Solutions , Legal Solutions, and Accounting Solutions.

For 10 years The Business Finance Store has been helping startups and other small businesses legally structure their companies, find the right franchises, get the funding they need, and to achieve the American Dream of owning their own successful business. Since expanding nationwide in 2007 they have helped thousands of companies and have funded over $60 Million in business credit lines, not including SBA loans.

Also see: Users like daily deals but overwhelmed by emails

Daily Deal sites grabbed more than $1.69B in funding, 22 financed in last six months

Thursday, July 14th, 2011

Daily Deal MediaOver the past six months, daily deal sites such as Groupon, Living Social and Gilt Groupe have attracted more than $1.69 billion in venture capital and other investments according to the new 2011 Daily Deal Investment Index released today by Daily Deal Media. Overall, 22 Daily Deal companies have received investments in the past six months.

“This market is exploding, with the number of daily deal companies growing from 70 to more than 350 in the past year,” said Boyan Josic, CEO of Daily Deal Media, the leading publication covering the daily deal market.

“Despite a conservative approach from many investors, as daily deals companies build scale and expand reach, they are finding support from the investor community. We see no signs of the market slowing down as an increasing number of sites test the market, helped by low barriers to entry.”

The 10 largest investments of the past six months include:

Company   Funding Round   Date   Amount ($Millions)
Groupon   Series D   1/11   950.0
Living Social   Series E   4/11   400.0
Gilt Group   Series E   5/11   138.0
Angie’s List   Private Equity   3/11   53.6
Ideeli   Series C   4/11   41.0
DealFind   NA   5/11   31.0
Popsugar   N/A   4/11   15.0
Zozi   Series B   5/11   7.0
Plum District   Series A   1/11   8.5
Half Off Depot   Series A   5/11   6.8

Globally, there are more than 3,000 total daily deal companies, including more than 1,000 in China, more than 900 in Europe and more than 600 in South America.

For more information or to purchase a copy of the 1H 2011 Daily Deal Investment Index, which includes a comprehensive breakdown of the deals and profiles of more than 30 leading Daily Deal companies, visit

Daily Deal Media is a news, information and data resource for those interested in the Daily Deal industry. Known for its breaking news and unbiased market insight, the company provides its readers with valuable insight, resources, industry reports, forums and conferences.

Not everyone thinks daily deal sites are the hottest thing coming down the pike. A Rice University professor who studies the space says their business model may not be sustainable in the longterm.

LivingSocial lines up banks for $1B IPO

Monday, July 11th, 2011

WASHINGTON, DC – LivingSocial, the DC-based main competitor to Chicago-based Groupon in the group local buying space, has selected banks to underwrite a initial public offering of stock to raise $1 billion, according to CNBC.

The company signed on with JP Morgan, Bank of Amercia, and Deutsche Bank, but has not yet filed papers with the U.S. Securities and Exchange Commission but reports say the company is likely to be valued at between $10 billion and $15 billion.

Competitor Groupon filed for an IPO to raise at least $750 million a month ago.

Yipit, a daily deal aggregator, estimates that LivingSocial captured 24 percent of the daily local deal revenue in top North American cities in May.

While the buzz around daily deal sites has been deafening, they have raised billions in venture backing, and new clones appear, well, daily, a Rice University professor says they may not have a sustainable business in the long run.

Utpal Dholakia in his third and most exhaustive study on the daily deal industry, says not enough businesses are coming back.

Other studies say consumers love daily deals, but are a bit overwhelmed by the volume of daily deal email these firms pump out.

Funded: Impermium, $1M for social web anti-spam service; RealDirect, $2M

Tuesday, June 28th, 2011

ImpermiumPalo Alto-based- Impermium has nabbed a $1 million seed financing round, which will enable the company to accelerate development of the world’s first service to deliver “anti-spam for the social web.”

Investors participating in the self-led funding round include Accel Partners, AOL Ventures, Charles River Ventures, Freestyle Capital, Greylock Discovery Fund and Morado Ventures. Angel groups Archimedes Capital and Embarcadero Ventures also contributed to the round.

Impermium was founded by former Yahoo! “Spam Czar” Mark Risher, Vish Ramarao, and Naveen Jamal. Prior to Impermium, the co-founders led the anti-spam and security group at Yahoo! Mail, where they drastically reduced spam and fraud for Yahoo! customers through sophisticated detection algorithms and machine-learning technologies.

The Impermium social spam and abuse defense platform is now available in limited beta. The company is working with numerous publishers across the social web, defending against attacks in the areas of spammy user-generated content, fraudulent registrations, account hacking, stolen passwords, and related forms of abuse.

Grotech only sold a minority of LivingSocial Shares

Dan Primack reports in his Term Sheet that the shares of LivingSocial that Virginia-based Grotech sold are just a minority of its holdings in the daily local deals firm. LivingSocial, which just purchased three foreign local deals companies, is giving Chicago-based Groupon a run for its money in the highly competitive space.

Primack notes that VentureWire says buyers of the Grotech LivingSocial shares included Lightspeed Venture Partners and T. Rowe Price.

New York-based RealDirect grabs $2M for homeowner marketing platform

RealDirect. a company with an online marketing platform for homeowners selling their property has raised a $2 million first round led by GSA Venture Partenrs with participation from Bendigo Partners and High Peaks Venture Partners.

Funded: Atlanta, Digital Assent and Renewvia; Maryland, Regent Education, more

Monday, June 27th, 2011

Digital AssentAtlanta-based Digital Assent, provider of the award-winning PatientPad self-service patient check-in and patient education solution, has received $7.5 million in a Series B funding round.  The lead investors were Sanan Private Equity, the BIP Opportunities Fund and Buckhead Investment Partners (BIP).  Imlay Investments and BLH Venture Partners, who led the Series A funding earlier this year, also contributed.

The PatientPad is a wireless touch-screen solution that automates the patient check-in process and delivers targeted health information and advertising to interested patients while they sit in their healthcare provider’s waiting room, exam room or treatment room. This funding will fuel expansion of the company’s sales, marketing and product development efforts.  Since January, the company has sold nearly 1,500 PatientPads to 175 practices in 25 states.

Atlanta’s Renewvia beams in $2.26M for solar tech

Atlanta-based solar power firm Renewvia has beamed in $2.26 million of an equity raise targeted at $6.15 million, according to a filing with the U.S. Securities and Exchange Commission. The company raised a bit over $1 million in a round aimed at $2 million in June 2009.

The company develops, installs, owns and manages solar powr plants for commercial property owners and developers.

Regent Education raises $4.5M for college financial aid automation tech

Frederick, MD-based Regent Education has chalked up $4.65 milion of a $5 million equity offering, according to a filing with the SEC.  The company previously raised about $1.85 million.

It sells SaaS solutions for colleges and private education institutions to automate financial aid processes. It caters to schools with non-standard or non-term offerings. It processes more than 1 million students a year.

Grotech sells LivingSocial stake for $200 million

PE Hub reports that venture firm Virginia-based Grotech has sold its stake in group local buying firm DC-based LivingSocial for $200 million. PEHub’s Jonathan Marino reports that Grotech did so without using secondary markets, instead making private sales to investors in multiple blocks.

Virginia-based MANDIANT closes strategic investment wiht One Equity Partners

MANDIANT, which sells detection and response solutions and services says it has closed on an equity investment from One Equity Partners. The amount of the financing was not disclosed.

Headquartered in Alexandria, Va., with offices in New York, Los Angeles and San Francisco, MANDIANT provides products, professional services and education to Fortune 500 companies, financial institutions, government agencies, domestic and foreign police departments and leading U.S. law firms. MANDIANT comprises one of the industry’s largest incident response and forensics forces.

“Over recent months the importance of knowing whether your network has been breached has become alarmingly clear. MANDIANT is the global leader in helping major corporate and government entities answer this question and execute an effective response. With the experience and financial resources of MANDIANT’s new investors, we are confident MANDIANT will prosper in the years ahead,” said OEP’s Jody Gessow.

Foursquare locates $50M

Foursquare, the location-based mobile platform and social network that helps members gain points for sharing information about local venues and brands, has raised $50 million in a round led byAndreessen Horowitz with participation from Spark Capital and O’Reilly Alpha Tech Ventures and Union Square Ventures. TechCrunch says the company’s pre-money valuation is $550 million.

Foursquare co-founders Dennis Crowley and Naveen Selvadurai met in 2007 while working in the same office space (at different companies) in New York City. Working from Dennis’ kitchen table in New York’s East Village, they began building the first version of foursquare in fall 2008, and launched it at South by Southwest Interactive in Austin, Texas in March 2009.

Foursquare has about 10 million users globally and 3 million check-ins daily. More than 400,000 businesses are using its Merchant Platform. Headquartered in New York, it has about 70 employees.

Survey says: 44 percent use daily deal sites, but 52 percent overwhelmed by dealmail

Monday, June 20th, 2011

PricegrabberDaily deals appeal to consumers always on the lookout for a bargain, with 44 percent of those in PriceGrabber’s Local Deals Survey saying they use daily deal sites. But even more (52 percent) say they feel overwhelmed by the number of deals offered via email.

The survey includes responses from 2,088 U.S. online consumers and was conducted from May 20 to 25, 2011.

That’s not all the daily deal providers such as Groupon, LivingSocial and a host of niche and regional firms have to worry about, though. As we reported last week, a Rice University prof who studies the space thinks the daily deal business model may not be sustainable over the long run.

We also suspect consumers may tire of too many deals from the same sorts of businesses (spas, massage, restaurants) or the number that don’t attract enough people to pan out.

Most consumers, though, seem to really like the daily bargains, the PriceGrabber survey says.

Consumers subscribe to several local deal sites and are looking to streamline

U.S. shoppers can’t seem to get enough of the thrill of finding a good bargain — but in true American fashion, they still want a shortcut to the greatest deal. According to PriceGrabber, 63 percent of consumers receive emails from two or more local deal Websites a day. Still, fully 60 percent of respondents said they feel the daily deal industry is getting crowded with too many sites.

Of course, PriceGrabber did not do the survey for fun. It has a motive.

This emerging frustration felt by shoppers as the daily deal industry explodes is underscoring the market’s demand for a more streamlined process to shop for local bargains. On June 1, 2011, PriceGrabber launched a solution: its local deal category, a one-stop shop for consumers who want to browse thousands of deals from more than 20 local deal Websites.

It’s simple: Consumers use daily deal sites to save money

Consumers’ interest in deals of the day can be attributed to the simple fact that shoppers are always looking for new ways to save money. Survey results find that 78 percent of respondents said they purchase local deals because they like saving money. Only 19 percent listed the ability to try out new services that are normally out of their price range.

“Whether we are in the depths of a recession or the height of a booming economy, consumers are looking to save money — period,” commented Graham Jones, general manager of PriceGrabber.

“The daily deals sector clearly shows promising signs for long-term growth, but the data reinforces the frustration consumers can feel when a new trend explodes so quickly. With our local deal category, PriceGrabber saw the opportunity to fill a niche begging to be added to the daily deal marketplace by providing consumers with a more efficient way to sort through numerous offers.”

Shoppers indicate that they love to share deals

The power of social buying is infectious. According to PriceGrabber, 86 percent of respondents indicated that when they find a great deal, they share the information with friends and family. When asked to select all of the ways in which they would share this information, 71 percent said word of mouth; 64 percent chose email and 26 percent shared information through Facebook.

“Our data shows that shoppers truly believe a deal is only as good as the people with whom you enjoy it,” said Jones. “Part of the appeal that comes with local deals and group buying is very likely the fact that the discount can be experienced with others. A trend that allows for experiences to be shared will almost certainly have staying power. We are confident that PriceGrabber’s local deal category will save consumers money and time by offering them the most efficient way for sharing great deals with their friends and family.”