Groupon is milking the money cow. On Thursday the company filed an SEC form for $6 million in equity financing. The filing comes just two months after Groupon raised $16.2 million…which came just one month after Groupon raised its monster $950 million round. Slow down, Groupon, you’re going to give yourself a nosebleed.
So what will the new funds be used for? After raising $950 million, $6 million seems like a drop in the bucket…which is completely ludicrous. But I have a few theories of my own. The $6 million plus the previously raised $16.2 million (part of the same round, maybe? Who knows) will likely be funneled into any one of Groupon’s strategies to get ahead of the clones, such as:
1) Hiring: Groupon has made it abundantly clear via its massive billboard campaign in the Bay Area that it is looking for fresh faces. Currently, the company is looking for anyone and everyone in the technology sector, and it’s particularly interested in people with Ruby on Rails experience. And then of course, there’s management. Groupon announced Thursday that it recently hired Margo Georgiadis to be the company’s new COO, stepping in for the soon departing Rob Solomon.
2) Technology: To more effectively beat out its competitors, Groupon needs to take a more tech-oriented approach to the daily deal space—which it’s doing now with the upcoming launch of Groupon Now, a mobile app that will allow smartphone owners to discover nearby deals on an hourly basis, rather than a day-to-day basis. The app is guaranteed to please merchants who will be able to exercise more control over the flow of traffic in their stores/restaurants, and the time-frames are so specific that they’ll only be able to use one or two services, tops.
3) Good ole’ fashioned expansion: Groupon’s strategy to date has been to simply take up as much space as possible, thereby boosting the company’s brand recognition and appealing to ever more remote neighborhoods. In fact, though I live in the capital of California, for the longest time Groupon was the only daily deal site that offered local deals in my area. LivingSocial eventually caught up, but Groupon had a massive headstart, which means I—like many others—am more familiar with Groupon and thus more likely to check out Groupon’s deals before anyone else’s.
4) Acquisitions: Earlier this week, Groupon announced via the GrouBLOGpon that it has just acquired Pelago, the company behind real-world discovery site Whrrl (which is being retired on April 30). No word on how much Groupon paid for the company, but the acquisition does raise some interesting questions about Groupon’s strategy. When Groupon raised its enormous $950 million round in January, we argued that Groupon should use that money to buy up other tech companies, since what Groupon wants at this point is instant access to technology that will allow it to deliver deals more efficiently and rise above the clones. It looks like the Pelago team is already well versed in the art of discovery, so Groupon could be unrolling some interesting new features in the near future.
Image source: Groupon.com