LivingSocial raises $110 million from existing investors: memo
SAN FRANCISCO (Reuters) - LivingSocial, the second-largest daily deal company, raised $110 million in a new round of financing from many of its existing investors, Chief Executive Officer Tim O'Shaughnessy wrote in a memo to employees on Wednesday.
"This investment is a tremendous vote of confidence in our business from the people who know us best, our current board members and investors," the memo said.
O'Shaughnessy did not say whether Amazon.com Inc (AMZN.O) had invested in this latest round. Amazon has been one of the largest investors in LivingSocial, but has written down the value of its stake.
A LivingSocial spokesman declined to comment. A spokesman for Amazon did not immediately respond to a request for comment.
LivingSocial raised hundreds of millions of dollars to chase larger rival Groupon Inc (GRPN.O) in the once-hot daily deal business. After Groupon went public in late 2011, the company lost about two-thirds of its market value, putting pressure on LivingSocial.
LivingSocial's valuation has probably fallen sharply, in line with Groupon's. This makes raising new money from venture capital backers difficult because investors try to avoid an official drop in the value of their stakes - what's known as a down round.
Later rounds of venture capital financing often involve the issuance of preferred and dividend-paying shares that give investors more control, a person familiar with LivingSocial's latest deal said. Such issuances make it harder to estimate an implied valuation for LivingSocial in this latest round, the person added.
The company, which has incurred heavy losses, cut about 400 jobs, or roughly 9 percent of its workforce, late last year to save money.
O'Shaughnessy said on Wednesday that the company had an "aggressive roadmap," including investments in marketing, technology and mobile, to become profitable and expand this year.
"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," the CEO wrote.
(Reporting by Alistair Barr; Editing by Gerald E. McCormick and Lisa Von Ahn)