While it's not clear what LivingSocial exactly needs $400 million for, the company will "use the new funding in its effort to narrow Groupon Inc.’s lead in the daily-deal market," Bloomberg News reported. I still don't understand the $400 million price tag on essentially a simple website with one big deal a day -- so I guess someone's getting paid some serious incentives.
Groupon is now valued at $4.75 billion, and was once courted by search engine giant, Google. Groupon, after a heavy pursuit, rejected their $6 billion offer and hoped a month later to secure a valuation of $15 billion. Now the Chicago-based Groupon is dealing with "copycat" sites like LivingSocial which are destroying its market share and value.
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At $2 billion, LivingSocial is only a third of the cost of Groupon, so perhaps Google might consider the Washington, D.C.-based company a bargain? If I were a daily deal site, I'd cash out now while the value was high. It's only a short amount of time before the market share is divided among the dozens of daily deal sites out there and their value will be much more realistic.