Grassroots e-commerce site Groupon valued at US$3bn

8 Nov 2010

Rapidly growing US coupon website Groupon is understood to be seeking venture capital funding that could value it in the range of US$2bn to US$3bn.

Groupon is one of a number of grassroots e-commerce sites springing up in a world that increasingly values thrift and supporting local businesses.

The company sends business in the direction of local businesses by taking a Twitter-like approach to enabling groups to buy products in bulk. The site makes a daily offer to each and every community in the 230 markets it is active in. If a certain number of people sign up for the offer the deal becomes available for all.

According to reports, the site has more than 20 million subscribers and plans to serve 300 cities worldwide by year’s end.

Rapid growth

The idea for Groupon came from CEO Andrew Mason and his former employer Eric Lefkofksy put US$1m seed money to develop the idea.

Since then, the rapid growth of the company has attracted investment of US$170m from investors, including Facebook, and an investment group led by Mail.ru Group in April valued the company at US$1.3bn.

According to a report on Bloomberg, the company, which was profitable within its first eight months, is now being valued at between US$2bn and US$3bn.

The Chicago-based company is likely to invest further in sales staff to sign up local businesses, such as restaurants and coffee shops.

The company has introduced seminars and a training programme for merchants who have reported they have been overwhelmed by the amount of business the site has sent their way.

Groupon is due to release a mobile phone application in the coming weeks.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years

editorial@siliconrepublic.com