The local commerce service group Groupon Inc (NASDAQ:GRPN) has openly disclosed its plans to extend its reach in Asia. The company is acquiring outside investment for Groupon India. It confirmed about raising $20 million from Sequoia Capital.
The deal between Groupon and Sequoia has already been announced to senior staff. However, it is not announced to public. The company plans to raise two more rounds of outside investment, one in this year and second round in FY2016. It is a long-term strategy of Groupon India as it wants to separate from its parent company in the U.S. Ankur Warikoo, the CEO of Groupon India declined to comment on the matter.
Groupon India was established out of Groupon’s first acquisition which was none other India’s SoSasta. The deal was announced back in January 2011. The company intended to expand on international platform and therefore, when for acquisition in India. Initially, the business was rebranded as Crazeal due to a domain squatter on groupon.in. Later, the company was successful in getting its brand back.
The brand was never an issue with Groupon Inc (NASDAQ:GRPN). The main problem associated with businesses that grow by acquisition is a centralized platform. The e-commerce businesses face the problem of centralization. It creates problems in day-to-day reporting. Also, it becomes problematic for the companies to communicate when there is a requirement to change the services or implement new technology.
Groupon India didn’t prove a blockbuster for the company. It was evident in the company’s last earnings when the rest of world accounted merely $101 million of the total revenue of $925 million.
Also, the business is affected with the changing e-commerce scenario in India. Companies like Flipkart and Snapdeal are among those that are collectively generating billion to meet demand of a growing middle class of consumers. In such a scenario, the company is considering options for its Asia business.