You don’t have to be Groupon to be hot.
Investors and potential buyers, lured by the rapid success of the Chicago-based coupon site, are banging down the doors of any company from New York to San Francisco with the slightest scent of social commerce.
LivingSocial, perhaps Groupon’s closest rival, recently attracted $175 million from Amazon.com, and it just bought a majority stake — at an undisclosed amount — in an overseas daily-deals site, Let’s Bonus.
Another startup, ShopSocial, yesterday raised $1.2 million in a venture round led by Metamorphic Ventures, a New York firm.
ShopSocial is joining a niche by providing retailers a way to show potential customers their friends have purchased certain products.
“Social commerce, which is a broad market, is extremely profitable and growing rapidly,” said Lewis Gersh, a partner at Metamorphic.
Under Groupon’s model, subscribers are offered deep discounts on local goods that become valid when a minimum number of subscribers accept the deal.
Investors can’t seem to wait to put money into other companies in the sector, such as competitor startups Blippy and Swipely.
Swipely was formed in 2009 by Angus Davis, who sold Tellme to Microsoft for $1 billion. Davis said investors have shown similar interest in his latest company.
“Investors are very interested in what we’re doing,” said Philip Kaplan, co-founder of Blippy. “We’re fortunate to have had dozens of inbound requests from large investors who want to be involved.”
Yet another social e-commerce company is Gilt Groupe, led by founder and CEO Kevin P. Ryan.
Ryan said his phone started ringing when big-money investors recently heard that his firm, with revenues of $500 million a year, would look to raise capital in the first half of the year.
Groupon sparked the craze. Yesterday, the company was reported to be in talks with bankers to launch an initial public offering that could be worth as much as $15 billion.
Ryan, a veteran of the late-90s tech bubble, said the money is warranted, and any talk of a bubble — and there’s plenty — is missing the point.
“It’s a sector that has grown very quickly in the last three years and it will continue to grow,” he said. “At every step of the way everyone has underestimated how big it would be.”