LivingSocial Funding Said to Be "Last-Ditch Attempt" to Save Company

by Rich Scherr 0

A day after DC-based LivingSocial announced $110 million in new funding, financial research firm PrivCo on Thursday issued a scathing assessment of the deal, calling it "a last ditch attempt to save the privately-held daily deals company from imminent financial ruin." It also pegs the company's current valuation at just $330 million, down from $5.7 billion in Dec. 2011.

A day after LivingSocial announced $110 million in new funding, financial research firm PrivCo on Thursday issued a scathing assessment of the deal, calling it “a last ditch attempt to save the privately-held daily deals company from imminent financial ruin.” It also pegs the company’s current valuation at just $330 million, down from $5.7 billion in Dec. 2011. Citing a current LivingSocial executive and investor, PrivCo said the financing was not a venture capital round, as had been widely reported, but rather a mixture of “emergency” convertible debt and warrants. PrivCo also said the latest financing forced LivingSocial to re-price participating investors’ previous rounds. “[It] effectively means that its most recent investors entirely control the equity of the company,” said PrivCo CEO Sam Hamadeh. “LivingSocial essentially threw itself at the mercy of its investors — who had already sunk over $823 million in the company before today’s $110 million additional lifeline — to avoid a total collapse of the company that would have occurred within days.” LivingSocial did not immediately respond to Potomac Tech Wire’s requests for comment by phone and email. Read more.

Leave a Reply

Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>