Groupon has acquired the Seattle-based portfolio company Pelago from Reliance Venture Asset Management. Pelago was founded by former senior executives of Amazon.com. Pelago had developed social-media and location-based mobile and web apps that allowed end users to share real time information about their favorite places and their business partners to offer incentives to customers for visiting them.
It was a stock-for-stock swap deal and the entire Pelago team will be joining Groupon. Groupon will integrate the backend technology which will provide a social media location based capabilities to their current group buying infrastructure. The acquisition will improve its offering to its end users by bringing them together with local discount offers.
“Reliance Venture has received a premium of 80 per cent and additionally expects to receive an additional return of 4x-5x on its original investment on its holding if Groupon IPO is priced at a valuation of $25 billion” said Harshal J Shah, CEO of Reliance Venture Asset Management. Hence the effective return is slated to be 7.2 – 9.0x of its original investment when Groupon shares list after its IPO on New York Stock exchange or NASDAQ.
Along with Reliance Venture Pelago was also invested into by Jeff Bezos, Founder and CEO Amazon.com, Silicon Valley venture fund Kleiner Perkins Caufield & Byers (KPCB) — which also invested in Groupon last year. This was the first investment made by KPCB from their iFund, which funds ideas and products that build upon the iPhone, iPod Touch and iPad. Other investors include T-Mobile Ventures and DAG Ventures.
Jeff Holden, CEO of Pelago, had earlier said, “We valued Reliance as a partner in the wireless space and the global potential they could bring to the company”. He also mentioned in a blogpost, “You would be right to expect that the ideas underpinning its and many of the inventions contained within may emerge under the Groupon banner”.
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