Even though there is no shortage of analysts who view the recent Groupon S1 filing with skepticism, there are signs that reports of the death of daily deals have been greatly exaggerated.
Yipit, one of the industry’s earliest and largest daily deals aggregators, has announced that it has raised $6 million in a Series B round. Venture capital group Highland Capital Partners led a group of funders that included a number of existing investors, including RRE, DFJ Gotham and IA Ventures.
“We were impressed with Vin [Vacanti] and Jim [Moran] in terms of the credibility and visibility they have established in the space,” said Guarav Tewari, a principal at Highland. “They are regarded by the industry as real experts.”
Tewari said that especially in a space crowded by companies offering similar services, Yipit represents a “much more efficient capital model.” Whether a consumer buys a deal from the deal’s originator or from an aggregator, the price to the consumer is the same, he noted. And even though Yipit receives a smaller cut of the profits, it is, Tewari said, a smaller cut “across a much larger field of players. And Yipit doesn’t have the same cost infrastructure.”
Tewari said that although Highland was not deaf to the rumblings that predict a daily deals doomsday, the VC team was actually looking beyond half-price massages to a paradigm in which Yipit would be a leader. He sees a trend toward “online to offline.”
“It’s a macro trend that is happening. The daily deals space has catalyzed that need.” Vacanti concurred, “The local space is about nine times bigger than the e-commerce space,” he said. “But most local purchases are still made offline. Yipit helps people make local purchases online.
Tewari said that HPC envisions that trend moving into many aspects of local commerce. Even in the deals space, he noted, there are outliers that are beginning to change the model. He pointed to Gilt City as an example of a site that doesn’t really offer deals in the conventional sense.
“They are creating experiences for their customers,” he said. “But they are not necessarily offering discounts.”
Vacanti said the company will use the funding mainly to recruit engineers and designers.
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