LivingSocial Closes Nearly Half of a $400 Million Round to Delay IPO

LivingSocial, the runner-up in the daily deals business, has secured $176 million in a new round of funding that could swell to as much as $400 million.

LivingSocial CEO Tim O’Shaughnessy

According to sources familiar with the company, the funding will be used for day-to-day expenses and to fuel its expansion efforts. The funding was confirmed in a document filed with the Securities & Exchange Commission today.

Both existing shareholders and new investors participated in the round.

J.P. Morgan was one of its latest investors. LivingSocial’s previous investors include: Amazon, Lightspeed Venture Partners, Revolution Fund, Grotech Ventures and U.S. Venture Partners.

The round will give LivingSocial enough financial flexibility over the next few months to decide when the timing is right to file for an initial public offering.

Most notably, a source tells us that all of the funding will go toward the company’s operations without previous investors or anyone from the management team cashing out. That is much different from Groupon’s last round, where nearly all of the $1 billion was paid out to management and other shareholders.

In April, the company raised $400 million at a $3 billion valuation. To date, the Washington, D.C.-based company has raised close to $776 million.

Earlier last month, the leader in the space, Groupon, successfully raised $700 million in its public debut; however, its stock has struggled to maintain its opening price.

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Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work