Investors add $110M to daily-deals site

CEO cites new plans for LivingSocial, which has lost $1B in 2 years
2013-02-21T00:00:00Z Investors add $110M to daily-deals siteThe Washington Post Arizona Daily Star
February 21, 2013 12:00 am  • 

WASHINGTON - Daily-deal company LivingSocial, which lost more than half a billion dollars last year, has received $110 million in new funding from its investors, according to a memo to employees obtained by The Washington Post.

"This investment is a tremendous vote of confidence in our business from the people who know us best, our current board members and investors," LivingSocial chief executive Tim O'Shaughnessy wrote to his staff.

The memo goes on to say that board members and investors "have reviewed our plans for 2013, and they are enthusiastic enough to want to commit additional financial resources through this round."

The memorandum did not specify which investors contributed the $110 million. D.C.-based LivingSocial has previously received funding from Steve Case's Revolution, Tysons Corner-based venture capital firm Grotech, a digital venture arm of J.P. Morgan and Amazon.com, which owns 29 percent of the firm.

A spokesman for LivingSocial would not comment.

The cash infusion could not come at a better time. LivingSocial's revenue climbed to $536 million last year, more than double the $250 million it earned in 2011. But the company continues to lose money, including more than $500 million last year and $499 million in 2011.

The earnings were disclosed in an Securities and Exchange Commission filing for Amazon.com. As a private company, LivingSocial does not independently disclose its financial data.

Last year saw LivingSocial's meteoric rise come to a halt. The company recorded a $579 million impairment charge in the third quarter after writing down the value of several international acquisitions. The company then let go 400 employees.

O'Shaughnessy said in the memo that the 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."

LOCAL ANGLE

LivingSocial opened a Tucson call center in July at 250 S. Williams Circle, and the company has said it stands to gain jobs as the company consolidates its customer-service operations from Washington, D.C., to the Old Pueblo.

The company chose Tucson for its first facility dedicated only to customer service in part because the city has been one of LivingSocial's strongest deals markets since it was launched here in early 2011, a LivingSocial official said last year.

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