June 9, 2011

Coupons.com Collecting Big Bucks From Investors

Internet bargains and online coupons appear to be the next big internet market and investors are jumping in quick with serious backing.

Coupons.com claims to have raised $200 million from institutional investors, Reuters is reporting.

About half of the new money will go to covering costs such as strategic acquisitions and marketing, Coupons.com Chief Executive Steven Boal explained on Monday. The remainder will be used to buy shares from existing investors, including employees.

Boal declined to identify the investors or the company's financial details but a person familiar with the situation said on Monday that this investment valued the company at $1 billion, with revenue of $100 million projected for this year. Coupons.com gets paid based on the number of coupons printed or saved by consumers, not on how many are actually redeemed, Boal explained.

"I see us getting along very well with Groupon, LivingSocial, and others," Boal told Reuters.

The Mountain View California-based company revealed about 6.5 million unique visitors in April, and trails Groupon, with 10.8 million visitors in the same time frame, and LivingSocial, with 8.8 million visitors.

ComScore analyst Andrew Lipsman said the newer companies are making consumers all the more eager for online deals, helping the sector overall.

The company distributes coupons through a variety of digital formats, including in-store kiosks, mobile applications and thousands of websites. The 13-year-old company has grown as consumers, manufacturers and retailers move away from using newspapers for coupons.

Coupon use overall, after years of decline, began to increase when the recession hit in 2008. "Frugal is the new black," Boal explained.

"As consumers are looking for savings and deals more than ever before, Coupons.com is expanding the coupons and promotions market, by allowing more brands to connect with more consumers at every touch-point across the digital landscape."

There is some debate as to whether an investment bubble is growing as social media finds ways to monetize. But Boal said companies that are being funded recently are more financially sound than those that ended up failing after the dot.com boom. And he asserts that Coupons.com's deal also is different from many others these days.

"We have raised the money to meet the demand, versus raising money to create demand," Boal said. Clients are asking them to move ahead faster and this funding will let it do that.

Coupons.com has always had the option of an initial public offering and this financing doesn't change that, he said. While there are no immediate plans for an IPO, he said that remains an option.