As announced today, Amazon is investing $175M into Living Social. This investment will fuel the company’s growth on three dimensions:
- International. Living Social recently bought a controlling stake in JumpOnIt, a local deals site in Australia, and have launched owned and operated sites in the UK and Canada. They’re actively looking at expansion into other geographies.
- Lifestyle focused deals. The company recently launched Living Social Family Edition and Campus Deals to target deals to the lifestyles of particular demographics.
- Vertically focused deals. Living Social recently launched a “near-cation” service called Living Social Escapes, focused on getaway travel. Their acquisition of Urban Escape is helping them create these amazing adventure experiences.
At Lightspeed, we continue to be incredibly excited about the growth prospects for the company, and increased our investment into the company, putting in an additional $8M. I posted earlier this year on why Lightspeed invested in Living Social, and our enthusiasm continues unabated to this day.
Local deals is a category whose growth has been extraordinary. This space didn’t exist two years ago and now is generated over $100M a month in revenue. Although there are many new entrants, and more each week, the two leaders, Living Social and Groupon, control more than 90% of the market share. Furthermore, the share of the two leaders is increasing over time. This has rapidly become a scale players game. It is no wonder that Google is rumored to want to buy Groupon. As Living Social CFO John Bax said earlier, $6Bn could be cheap. There are only two companies at internet scale in the local deals space right now, and the major internet companies are all thinking about what their response to this category’s growth should be. Amazon has always been forward thinking and we’re excited to have them join the board and the investor base.
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