The Download: Groupon’s trading is good sign for others


Employees and guests of Groupon ring the opening bell at the Nasdaq Market in celebration of the company’s IPO on Friday. (Brendan McDermid/Reuters)
November 6, 2011

Groupon burst onto the public markets Friday as the Chicago-based discount purveyor capped its initial public offering with a strong showing in its first day of trading.

If the company can sustain that momentum it could bode well for the investors who got in on the ground floor before it became an international brand. Washington business mogul Ted Leonsis and local partners at New Enterprise Associates were among its first backers.

The company initially sold the shares at $20 each, for a market value of $12.7 billion, according to the Associated Press.

Groupon endured several high-profile hiccups during its pursuit of an IPO, including questions about its accounting practices and marketing expenses that caused some analysts to question its long-term sustainability.

As a result, similar doubts were cast about the broader industry, including Groupon’s chief rival, Washington-based LivingSocial. Some analysts say sentiment could turn around.

If Wall Street gives a thumbs up “it has a glow effect on everyone in the business,” said Mark Fratrik, vice president and chief economist at Chantilly-based BIA/Kelsey.

So what’s next for LivingSocial? Reports have swirled in the past about a possible public offering or large venture capital round. The company declined to comment.

“If I’m on LivingSocial’s board, I need to get public very quickly; otherwise, the distance between me and Groupon is going to get bigger,” said John Backus, managing partner at New Atlantic Ventures. (Backus invests in a much smaller dealmaker with a different business model called Scoutmob.)

Smaller sums

GeoPay said last week that the mobile-to-mobile cash transfer company will open offices in Reston and Bishkek, Kyrgyzstan after securing an undisclosed sum of money from investors.

The company targets regions where people often use mobile phones but may not have access to banks. Ex-AOL executive Darren Feeley serves as chairman and chief executive.

Also, Digital Intelligence Systems, an information technology staffing and consulting company based in McLean, announced last week that Reston-based Access National Bank had agreed to loan it $5 million. The firm said the money will be used to build out its infrastructure, including additional offices, as it pushes toward its goal of $500 million in revenue by 2014.

Steven Overly covers the business of technology, biotechnology and venture capital in the Washington region for The Washington Post and its weekly Capital Business publication. In that capacity, he has written about start-up struggles, investment trends and major drug discoveries.
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