Social networking got into our faces and daily living with Facebook, into our jobs and business with Linkedin -- and now it’s gotten into our desire for discounts and coupons with Groupon.com.
In a mere three years, this start-up recently turned down an offer of purchase from Google for an estimated $6 billion, plans to raise a reported $950 million for international expansion, talked to investment bankers about a possible IPO and is said to be discussing a partnership with China’s answer to Facebook, Tencent, according to Kara Swisher of All Things Digital.
Tencent is the biggest social network in China and considered to be the third most valuable Internet company in the world. But as Swisher points out, China has been tough to crack for U.S. or any foreign companies because of its reputation for creating its own knockoff version of everything. Swisher says there’s even a Groupon.cn which is a straight copy of the U.S. site but has no affiliation with it.
Co-branded joint venture
Quoting sources close to the deal, Swisher writes that the terms are unclear, but are likely to involve some sort of co-branded joint venture effort between the two. This would be a departure from Groupon's recent strategy of acquiring local foreign companies and rebranding as it did with Groupon Hong Kong, Groupon Singapore, Groupon Philippines and Groupon Taiwan.
And while other giant Internet companies such as eBay, Google and Facebook have been thwarted in their attempts to expand into China, Groupon doesn’t carry some of the baggage or privacy issues some of those companies did. Another reason this kind of partnership could work according to Swisher is that there is a strong link between Tencent and one of Groupon’s key investors, Mail.ru Group.
She quotes sources as saying Mail.ru owns five percent of Groupon and Tencent is an investor in Mail.ru, which recently had an IPO.
Other proposals
Meanwhile, there has been a flurry of news reports about investment bankers making proposals to take Groupon public with an initial public offering. Groupon has said it has been planning its public debut for later this year. And now Swisher quotes sources as saying it will most likely happen in the fall.
Groupon, which is based in Chicago, offers daily discounts to its 50 million subscribers in hundreds of local markets. Its investors include venture capital firms Accel Partners and Battery Ventures, and the Russian Internet firm Digital Sky Technologies, which also invested in Facebook .
In a separate report Kris Ashton writes in the Daily Deal that the investment bank most likely to do the Groupon IPO is Morgan Stanley, which reportedly has an investment in the company.
According to Ashton, bankers are moving Groupon toward an IPO now while the company is still number one in the daily deals industry. Plus reports that Goldman Sachs could be taking Facebook public next year has investment banks that didn’t get in on that deal anxious to grab on to the next tech star and Groupon could easily fit that bill.
Rapid growth
In just over two years, the social buying site has grown from a start-up to one of the fastest evolving companies on the internet, with over 50 million users around the globe and annual revenues of over $1 billion.
While most of Groupon’s competitors are now lagging far behind, Ashton notes that may not be the case for long. Two rivals, LivingSocial and Lightspeed have said their goal is to one day push Groupon out of the number one spot.
It’s certainly happened before. Remember Myspace? It dominated the social networking space until Facebook blew it off the map.
