Daily deals might be out of fashion, but that hasn’t stopped at least one company in the space from being able to attract more venture investment. Apparently LivingSocial sent a memo to employees this morning, announcing that it has raised another $110 million.
The new funding comes on top of more than $800 million that the company has raised since being founded in 2007. Investors include Steve Case, Grotech Ventures, Revolution, US Venture Partners, Lightspeed Venture Partners, JP Morgan, T. Rowe Price, and Amazon, which famously invested $175 million in the startup, taking a 29 percent stake.
In the memo (full text below), CEO Tim O’Shaughnessy said that many the company’s current investors had “reinforced their support for the company through a new round of financing,” calling the funding a “tremendous vote of confidence in our business from the people who know us best” — its current board and investors. According to the memo, the round followed a “competitive process,” in which the company had multiple options.
While the memo said LivingSocial will continue its aggressive roadmap for expansion, including “increased investment in areas like marketing, technologies, and mobile,” the company is also working toward reaching profitability. In November, LivingSocial went through a round of layoffs that cut 400 employees, or about 10 percent of its workforce. That restructuring happened across its sales, customer and merchant services, and takeout/delivery groups.
While the company had doubled revenue in 2012, from $250 million to $536 million,* LivingSocial continues to operate at a loss. The company had a net loss of $650 million in 2012, compared to $499 million the year before. Due to various impairments, the value of Amazon’s stake in LivingSocial had declined to $52 million, down from the $175 million that it originally invested.
The new funding will help keep things going while LivingSocial attempts to become cash-flow positive, and will also provide a bit of a cushion against “unanticipated events or bumps in the road,” according to O’Shaughnessy.
Here’s that memo:
We’ve got some great news to announce today, as many of our current investors have reinforced their support for the company through a new round of financing that will give us an additional $110 million to build our reserves, solidify our long-term plans, and execute against our vision for the future.
This investment is a tremendous vote of confidence in our business from the people who know us best, our current board members and investors. They have reviewed our plans for 2013, and they are enthusiastic enough to want to commit additional financial resources through this round. This round also follows a competitive process in which we were fortunate enough to have multiple options for funding.
As you know from our all-hands last month, we have an aggressive roadmap for profitability and expansion this year, and those plans include increased investment in areas like marketing, technologies, and mobile. This new investment round will allow us to dedicate the resources we need, while also building a significant cash reserve against unanticipated events or bumps in the road.
This new investment does not change our plans to reach profitability, and we believe that a cash-flow positive and growing company will give us even deeper resources to take advantage of new opportunities, extend our promising lines of business, and expand a robust funnel of new customers. We will be sharing regular updates on our results and progress against goals as we move forward.
We’ve had a solid start to the year, and I am excited about the opportunity to solidify our path to success over the next couple months. Thank you again for your hard work and dedication.
* According to financial data provided in Amazon’s Annual Report
LivingSocial is the social commerce leader behind LivingSocial Deals, a group buying program that invites people and their friends to save up to 90 percent each day at their favorite restaurants, spas, sporting events, hotels and other local attractions in major cities. LivingSocial has an extensive user base of more than 85 million, and is headquartered in Washington, D.C.