LivingSocial, Groupon Riding Deals "Frenzy," But Will It Last?

Just a couple of years ago, the idea that start-ups offering modest local business discounts would be the hottest properties in the tech world would have brought snickers.

Now, Google may be on the verge of buying one of those companies, Groupon Inc., for $6 billion or so, and another one, LivingSocial Inc., just bagged a $175 million investment from Amazon.com Inc.

Snicker no more. Daily deals are big money, and big money is required to gain dominance.

“The size of the round is enormous because the size of the opportunity is enormous,” said Jeremy Liew, managing director at Lightspeed Venture Partners, which added $8 million of its own to the round.

The Amazon investment, as well as the potential acquisition of Groupon by Google, signals the quick explosion of and high expectations for an online-to-offline local small business advertising industry that just three years ago did not exist.

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