Groupon Seeks New Funding At Valuation Less Than Google’s $6 Billion

This is part 2 of a 3 part Groupon series

I wonder if Andrew Mason and Groupon read my first blog about Groupon saying no thank you to Google’s $6 billion? Because its most recent news from this morning seems to fit in perfect syncopation with my vision and plan for part 2 of my Groupon series: so what could they possibly value themselves at? According to a Bloomberg piece that broke earlier today, Groupon is seeking a new round of funding. But heres the kicker: its at a valuation less than that of what Google offered.

Bizarre much? Well it is not uncommon to when raising money that you cannot get the valuation that someone recently offered when attempting to acquire you. Groupon, one of the world’s fastest growing companies, will most likely use the money to hire sales staff and continue to scale. After all, in order to make itself look smart for turning down Google’s $6 billion, it needs to retain its lead over social commerce and coupon-site rivals. Its closes rivals is LivingSocial, another deal-of-the-day service, scored $175M and a partnership from Amazon.com earlier this month.

The daily coupon/e-coupon/social commerce space is going to be flooded with spin-offs and start-ups on 2011. And if Groupon wants to stay kind of that hill, its said they are looking to raise more than $100 million dollars in venture capital but again — at a valuation considerably lower than the $6 billion cash that Google offered. According to a Experian Hitwise blog post, Groupon is receiving 79 percent of U.S. visits among group buying sites as of last week. But the basis of the report is that Living Social is beginning to creep closer and closer to a significant part of the market share that Groupon has dominated to date.

The newest round of funding would put Groupon valuation at closer to $3 billion dollars than the $6 billion Google offer (it was cash remember). So what is Groupon’s plan? Location-based services are going to dominate the talk of the next two years. How do we tie in location-awareness, GIS, and the subsequent mobile advertising, commerce and purchasing.

But where does Groupon fit into all of that? I am not of the school of thought that Groupon can do what Facebook did, and just sheer scale out of competition. Their business is focused around coupons … consumers are always looking for a better deal. There is no loyalty … for loyalties. Social commerce is no place for kneecaps.