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Tweet TWEET Invests $175 Million in LivingSocial Site Inc. invested $175 million in, a daily coupon website, to benefit from surging demand for online discounts on products and services.

Venture capital firm Lightspeed Venture Partners invested $8 million in the site, which will use the funds to expand globally, Washington-based LivingSocial said today in a statement.

Amazon Chief Executive Officer Jeff Bezos is using part of the company’s $5.89 billion in cash to back a service that helps consumers save on everything from hotel stays to spa visits. Google Inc. offered to buy, the biggest daily deal site, for $6 billion, people familiar with the matter said Nov. 30. The approach has heightened interest in comparable sites.

“We see a tie-up between Amazon and LivingSocial as a smart strategic and financial move,” Marianne Wolk, an analyst at Susquehanna Financial Group in New York, wrote today in a research note.

Startup LivingSocial is likely to generate sales of more than $500 million next year, CEO Tim O’Shaughnessy said last month. Groupon, also closely held, may surpass that milestone this year, people familiar with the matter have said.

Before the investment announced today, LivingSocial had raised about $50 million from Lightspeed, Revolution LLC, Grotech Ventures and U.S. Venture Partners as well as from AOL Inc. co-founder Steve Case.

Bezos Buys

Amazon is looking for ways to spend its cash and extend its lead over rivals including EBay Inc. It agreed last month to pay $545 million for Quidsi Inc., the owner of and This year it also bought e-commerce sites and as well as digital music store Amie Street.

Daily-deal sites offer discounts -- typically 50 percent -- from businesses such as restaurants and nail salons, then keep a portion of the sales. The promotions activate once enough people sign up for them. The barriers to start such a site are few; almost anyone with an e-mail list and a deal can do it.

They’re trying to get a piece of the local advertising market, which is set to reach $133 billion this year and is moving online and away from print, radio and direct mail, according to consulting firm BIA/Kelsey in Chantilly, Virginia.

Amazon, based in Seattle, slipped 2 cents to $176.53 at 4 p.m. New York time in Nasdaq Stock Market trading.

To contact the reporter on this story: Joseph Galante in San Francisco at

To contact the editor responsible for this story: Tom Giles at

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