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More of Groupon's Early Venture Backers Bail Out

Monday, 20 August 2012 04:41 PM

Groupon Inc. backers Battery Ventures and Andreessen Horowitz have divested their stakes in the daily-deal website, joining a group of early investors who have sold the stock and added pressure to slumping shares.

Battery sold all of its 15.99 million shares earlier this year, according to data compiled by Bloomberg. Andreessen Horowitz sold its 5.1 million shares in June, said a person with knowledge of the matter, who asked not to be named because the sale wasn’t publicly disclosed.

Groupon is one of several Internet stocks, including Facebook Inc., to come under pressure with the lifting of lock- up periods, which bar insiders from selling shortly after initial public offerings. Investors are also shunning these consumer-Web companies amid concern that they can’t withstand competition and keep luring business at a fast enough pace.

“These are the people that were the initial backers that probably know more about the details behind Groupon’s results than the general public,” said Larry Chiagouris, a professor of marketing at Pace University’s Lubin School of Business in New York. “The fact that they have chosen to move their positions out of the company tells you that they obviously believe there’s likely to be more downside.”

Grace Ellis, a spokeswoman for Menlo Park, California-based Andreessen Horowitz, declined to comment on the firm’s holdings. Karen Bommart, a spokeswoman for Menlo Park-based Battery Ventures, declined to comment. Paul Taaffe, a spokesman for Chicago-based Groupon, didn’t respond to requests for comment.

Trimming Stakes

The Chicago-based company makes money by selling discounts -- known as Groupons -- from businesses such as restaurants and nail salons. It then splits the revenue with the retailers. Groupon earlier this month reported second-quarter revenue that missed estimates due to economic weakness in Europe.

Other pre-IPO investors who have sold Groupon include Fidelity Management & Research, which trimmed its stake by 6.2 million shares to 13.2 million in the quarter ended in June, according to data compiled by Bloomberg. Maverick Capital reduced its holdings by 4.35 million shares to 1.98 million over that period, the data show. Kinnevik Investment AB said in June that it divested its direct holding in Groupon of 8.4 million shares.

One of Groupon’s largest investors, T Rowe Price Associates Inc., added 21.4 million shares to its stake, for a total of 75.1 million, according to data compiled by Bloomberg. Morgan Stanley, one of the lead underwriters for Groupon’s IPO, added 8.19 million shares, for a total of 15.7 million, the data show.

Early Investors

Battery Ventures, which had previously reported a stake in Groupon in March, didn’t hold any shares of Groupon as of the quarter ending June 30, according to a 13F filing. Battery was one of Groupon’s earliest investors in 2010, when it joined Digital Sky Technologies in a round of funding that valued the company at $1.3 billion. Andreessen Horowitz invested in early 2011, when Groupon raised $950 million from a group of investors.

Groupon shares fell 2.1 percent to $4.65 at the close in New York, widening the plunge since the IPO to 77 percent.

The Wall Street Journal earlier reported that Andreessen Horowitz sold its Groupon stake.

Bloomberg LP, the parent company of Bloomberg News, is an investor in Andreessen Horowitz.

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Monday, 20 August 2012 04:41 PM
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