Offer Me, one of Australia’s early adopters of the group-buying model, released a media statement on Friday alerting the media that it is on the “verge of” receiving “substantial” venture funding from overseas investors.
The announcement came barely a week after the revelation that another Australian group-buying business, Spreets, was acquired by Yahoo!7 for $40 million.
The purchase made waves on three fronts — it may have been the most profitable website flip in Australian history, Spreets managed this despite launching only 10 months earlier, and the deal was seen as the first big move in what is expected to be a consolidation of the nation’s group-buying market.
With the expected infusion of overseas capital, OfferMe said in its statement that it hopes to emerge as a major player in that consolidation.
“A number of overseas investors, including U.S.-based private equity and venture capital fund firms Insight Venture Partners and Bessemer Venture Partners, have approached OfferMe in the past year,” said OfferMe marketing manager Bekim Ahmedi. “We are happy to find the backing of the strategic investors who support OfferMe’s vision.”
The group-buying site explosion
Group-buying sites have proliferated in Australia over the past year following the explosive success of Chicago-based Groupon, which turned down a reported $6 billion acquisition offer from Google in December.
OfferMe is no johnny-come-lately. It was launched in August 2008, when the phrase “eCommerce 2.0” had a fresh cachet.
The platform acts like a virtual trading floor, with registered users expressing an interests for certain products and sellers offering a price quote. OfferMe has attracted more than 500 Australian business to its deep-discount platform.
Sunny Sun, the chief architect of the OfferMe platform, previously oversaw the development of the E-Trade Japan portal.
Ahmedi said the company was not ready to disclose details, such the amount of funding, until the agreements were finalised. However, he added, “we continue to be confident that OfferMe will consistently deliver double-digit month-to-month growth.”
Why make the announcement now?
The reasons why private equity firms such as Insight Venture Partners and Bessemer Venture Partners might be interested in sites of this nature are clear.
While traditional media channels struggle to monetise their audiences, sites like Groupon are turning over hundreds of millions per annum ($800 million, according to Mashable) and are building extremely large databases, extremely quickly, in the process. (Spreets built an Australian database of 500,000 in 10 months.)
Furthermore, every private equity investor is looking for an exit. So, when Google offered Groupon $6 billion to come hang at the Googleplex, the private equity world sat up (and then promptly began writing cheques).
However, what is not so clear is why OfferMe might be making this announcement now?
While the mainstream media was quick to cover the media release (here, as one of the better reviews of the collection-buying ‘boom’), most failed to ask why a business might announce that it is on the ‘verge’ of a big deal?
Heck, Anthill’s sales staff are always on the ‘verge’ of a big deal. Every entrepreneur I have ever met is on the ‘verge’ of a big deal. But being on the ‘verge’ of a big deal is, indeed, not a big deal (and possibly not even news).
So, why would an organisation produce a media release and court the media’s attention about a deal not done?
We suspect that the more interesting story is more likely to be found in the motivation for the announcement, rather than in the announcement itself.
Why do you think OfferMe is inviting the media to tell the world it is on the ‘verge’ of a deal? Why would you distribute a media release about a deal not done?