It was only in March that LivingSocial, the number two group buying site, took $25m in Series B funding. That, apparently, only tided the fast-growing company over for six weeks. Today the company is back with another $14m in funding, largely from the same investors.
That may seem like a lot of cash to take on in a few short months, and it is. But it pales in comparison to the $135m that Groupon, the leader of the pack, took from Digital Sky Technologies and friends a few weeks ago.
Investors are scrambling to get in on the suddenly hot collective buying craze. It’s no surprise why. Groupon is rumoured to be making a cool $1m per week in profit through the sale of deeply discounted coupons for local goods and services.
LivingSocial is offering deals in 18 cities, but still has a lot of catching up to do. Groupon is operating in nearly 50 cities, including London. But essentially, both companies offer nearly identical offers each day.
While both companies look to be gaining traction and expanding, the current craze may not last. Frugal consumers are looking for deals these days, and there are only so many businesses that will agree to such deep discounts for a bit of extra foot traffic.
A wave of group buying sites rose up ten years ago and fell hard during the dot com crash. Then again, those companies weren’t making $1m a week in profit.
