IPO Watch Groupon

IPO WATCH GROUPONZI With an impending IPO, the online couponing startup is under public scrutiny, causing some to discount expectations. 41% 1. Background 88.2 mill 41% of coupon "enthusiasts" come In 2009, online coupon 88.2 million adults will redeem redemption growth increased 263%. from households with incomes more Online couponing: online coupons in 2011. than $70,000. Groupon: • Lost $413 million in 2010 • Revenues in 2010 totaled $713 million • 83 million email subscribers 7,000+ employees • Business grew 2,241% between 2009 and 2010 Sold 30 million coupons in 2010 and 28 million in first gtr. 2011 2. History Andrew Mason CEO & Co-Founder Groupon.com Groupon has been called the fastest growing company ever. Mason gradu- ates from Northwestern University. Groupon raises $30 million in series B financing. Mason launches The Point, a social network, after receiving a $1 million invest- ment offer from Eric Lefkofsky and dropping out of the Univer- sity of Chicago. The Point fails Groupon raises $4.8 million in series A financing. Twenty people purchase Groupon's first Chicago deal: two pízzas for the price of to stay afloat, so Mason moves on to daily deals site Groupon. one. GROUPON 2003 2007 2008 2008 2008 2009 $1.5 BILLION Groupon expands to five North American markets including Chicago, Boston and New York. Groupon acquires CityDeal, a German Groupon "clone." Groupon raises $135 million from Russian invest- ment firm The company is valued at $1.5 billion. Groupon turns down Google's $6 billion buyout offer. Digital Sky Technologies. Groupon spans across 160+ US cities and in 33 countries. Groupon raises $950 million in series D financing. 2009 2010 2010 2010 2010 2011 SEC Groupon files an S-1 with the SEC to raise $750 million in an IPO. 2011 3. Impending IPO SEC I S-1 On June 2, 2011, Groupon filed a S-1 with the SEC. • Groupon plans to raise $750 million in IPO • Groupon plans to trade under the ticker GRPN • Groupon has made 13 acquisitions in the last year • Groupon has raised $1.2 billion so far in venture funding • Groupon co-founder Eric P. Lefkofsky owns 64,113,046 Class A shares (21.6% of the total) and Mason owns 22,967,252 Class A shares (7.7% of the total) Meet Groupon's Billionaires 24 %24 Although we don't know how much each of Groupon's estimated 296 million shares will cost, we can estimate based on the company's $25 billion March valuation. Here's a look at the percentage of shares they own, and how much they could poten- tially make: Cap Eric Lefkofsky Andrew Mason CEO & Co-Founder Co-Founder $1.9 Billion O $5.4 Billion 7.7% Stake | 21.6% Stake New Enterprise Associates (Dick Kramlich pictured) Brad Keywell Co-Founder $1.7 Billion $3.7 Billion 16.9% Stake 14.7% Stake Accel Partners (Kevin Efrusy pictured) Robert Solomon Former President $1.4 Billion $1.7 Billion 5.6% Stake 16.8% Stake Samwer Brothers Owners of German CityDeal In March 2010 Groupon acquired CityDeal, a German Groupon "clone," founded by the Samwer brothers. $2.6 Billion 10.3% Stake 4. Criticism & Praise When you're growing as fast as Groupon has, it's easy to be the target of criticism and praise. Here's what some are saying: Criticisms: P NZI SCHEME The company raised $950 mil- lion in January and had only $209 million in cash by March. According to the IPO filing, the money went to employees and early investors. Some called Groupon's business model a Ponzi scheme based on the company's methods of bringing in revenue and financing. Despite great top-line growth in many cities, a more in-depth look proves that Groupon's business model has already peaked in several of its oldest markets. GRO. ON 24 GROUPON It currently costs Groupon $1.43 to make $1. Studies show that existing Grou- pon customers are purchasing Reports claim that Groupon is selling fewer deals to each merchant, leading some to wonder if the merchants don't fewer and fewer deals. like working with Groupon. Praise: COUPON Groupon has taken a simple concept (coupons) and not only has made them cool, but Groupon's innovation isn't the daily deals, rather it's getting the credit for (and making money by) connecting folks Despite criticism that mer- chants don't like Groupon, many do multiple deals with the company, and the number of merchants participating in daily deals is increasing. convenient to find and use. online with offline businesses. 5. Competition facebook deals livingsocial Founded: 2011 Founded: 2007 Valuation of company: $75 billion Valuation of company: $2.9 billion (est.) Revenue: $50 million/month (est.) Customer base: 28+ million users Revenue: Unknown, but Facebook makes $170 million/month (est.) Customer base: 600+ million potential users Founded: 2011 Google offers Valuation of company: $172 billion Revenue: Unknown, but Google makes $2.86 billion/month (est.) Customer base: 100-200 million potential users RETHINKING GOOGLE OFFER? Google 2$6 The recent financial criticism GROUPON has some speculating that the Google buyout offer of $6 bil- lion may have been a great opportunity for Groupon. Billion Sources: Businesslnsider.com | Geekwire.com | eMarketer.com | yipit.com | Forbes.com | stevecheney.posterous.com | Portfolio.com | AlIThingsd.com | Knewton.com | MinyAnville.com | Examiner.com | Blog.Nielsen.com °MBA Information provided by: http://www.onlinemba.com DEAL