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LivingSocial Funding Said to Be “Last-Ditch Attempt” to Save Company
/ February 21, 2013 12:26 pm

A day after LivingSocial announced $110 million in new funding, financial research firm PrivCo on Thursday issued a scathing assessment of the deal, calling it “a last ditch attempt to save the privately-held daily deals company from imminent financial ruin.” It also pegs the company’s current valuation at just $330 million, down from $5.7 billion in Dec. 2011. Citing a current LivingSocial executive and investor, PrivCo said the financing was not a venture capital round, as had been widely reported, but rather a mixture of “emergency” convertible debt and warrants. PrivCo also said the latest financing forced LivingSocial to re-price participating investors’ previous rounds. “[It] effectively means that its most recent investors entirely control the equity of the company,” said PrivCo CEO Sam Hamadeh. “LivingSocial essentially threw itself at the mercy of its investors — who had already sunk over $823 million in the company before today’s $110 million additional lifeline — to avoid a total collapse of the company that would have occurred within days.” LivingSocial did not immediately respond to Potomac Tech Wire’s requests for comment by phone and email. Read more.

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