LivingSocial, the daily deals site whose popularity has exploded in recent months, is looking to strengthen its financial position by raising $200 million in fresh capital from old and potential new investors. The deal is expected to be completed next week and will include a credit facility of $100 million.
Investors see this is as a response to the initial public offering (IPO) of Groupon, the company that has defined the daily deals business and is a major competitor of LivingSocial, which has proven to be hugely successful. Groupon’s shares rose 31% in value after their first day of trading two weeks ago and, although they have undergone a slight decrease since the IPO took place, the company is still valued at an impressive total of $16.7 billion.
LivingSocial can use this fresh infusion of capital in order to continue growing by focusing on exploring new market opportunities both domestically and internationally and by strengthening its existing online platform. Recently, it has pursued a strategy of adding more sophisticated premium services to its original offering, which revolves around discovering and rating dining opportunities in major cities across the country. It now offers an instant delivery services for restaurants. It is also experimenting with a premium service focused specifically on fine dining opportunities in the Washington D.C area. If the experiment proves successful, the company expects to roll out this service nationwide in the coming months.
Although there has been a lot of speculation about a potential LivingSocial IPO, the company has so far resisted the calls to go public. According to The New York Times, senior management is still discussing an eventual IPO but has not finalized plans as to when it will take place.
It is understood that LivingSocial is seeking to raise the additional capital by talking to a number of current investors as well as seeking to engage new ones, such as JPMorgan Digital Growth Fund, which has invested in other notable online ventures such as Twitter.