LivingSocial Raises $25 Million In Series B Round

D.C.-based LivingSocial has raided $25 million in a series B round, with an emphasis on their LivingSocial Deals product as a continued source of revenue growth. The round was led by U.S. Venture Partners, with Grotech Ventures and Steve Case’s Revolution, LLC participating as well. The company is also announcing the expansion of LivingSocial Deals into four more cities: Chicago, Denver, Raleigh Durham, and San Diego.

While the company is one of the leading Facebook application developers, LivingSocial shifted their focus to their deals product over the past few months and the change in strategy has been paying off. In January, the company raised an additional $5 million as a follow-on to their Series A round. LivingSocial’s deals service is now becoming one of the leading local deals services on the web.

Groupon, is probably the best known in the category, however the two sites use completely different models. Groupon requires an initial group of users in order for each deal of the day to become active. LivingSocial Deals on the other hand makes all deals active from the start. There have since been numerous copycats, but LivingSocial has been quick to expand and with the company’s Deals iPhone application, they have been experiencing tremendous growth.

LivingSocial is also hoping that the company’s new Deals affiliates program will help boost revenue even more. In a model similar to the affiliate one, Peanut Labs and RockYou have both announced deals integration into Facebook applications as an alternative monetization solution. This is clearly an extremely hot space and this latest round of funding is a testament to that.

Tim O’Shaughnessy, CEO of LivingSocial, says that the latest round of funding will be used to rapidly expand the markets in which Deals operates, and acquire resources for their “feet-on-the-street” approach to targeting local businesses. It will be interesting to see how the company’s strategy evolves with their large cash reserve.

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