Chicago based Groupon, which was formerly known as ThePoint, has raised a hefty Series B financing - $30 million - from new investor Accel Partners and existing investor New Enterprise Associates. Accel's Kevin Efrusy joins Groupon's board of directors.
The company is going gangbusters. They offer users deep discounts on local deals - spas, sky diving lessons, hotels, restaurants, golf, whtaever. Discounts range from 40%-90% of the normal price. If enough people buy into the offer, everyone gets the deal. If there aren't enough people, no one gets the deal. Groupon collects payment and passes it on, minus their fee, to the business.
Example - 1,600 people in one day bought skydiving lessons in Chicago, says the company, getting a 44% discount on the $229 price. And the company making the offer normally sells just 6,000 lessons per year. They sacrificed some profit, but gos lots of new customers.
Groupon generally takes 30% - 50% of the total price paid for the service, and they are on track, they say, to do $100 million in gross merchandise sales in 2010. They reached profitability in June 2009, just six months after launching the service.
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