It’s tough to be a startup in the daily deals space these days. To quantify some of this, CB Insights has released a report covering valuation multiples for both M&A and venture financing for daily deal startups. It’s not a pretty picture as valuation multiples of both price per subscriber and price per voucher are dropping quickly. Yesterday, The Wall Street Journal (courtesy of aggregator Yipit) reported that nearly one-third (170 out of 530) of all daily deal sites have been shut down or acquired. If you blend the Yipit Data with the CB Insights data it looks like 98 have been shut down and 72 have been acquired. (Of course this is two separate data sets so you have to be careful but it’s probably directionally accurate.)
Focusing specifically on the 72 acquisitions in the CB Insight’s report, it looks like an increasing percentage of these acquisitions are being done to acquire talent as the graph from their report shows below:
I still maintain that the real lesson from Groupon and Living Social is this emerging “default business model” of enabling commerce. However, clearly there are a number of copycat daily deal sites that are in real trouble as that market appears to have jumped the shark. As Schumpeter would no doubt point out, this could be just the natural cycle of creative destruction that accompanies times of innovation, but clearly a number of the remaining players in the market are going to need to be much more creative and differentiated. For additional depressing statistics for any of you in the daily deal space check out the infographic below courtesy of CB Insights.
And now to try and end the post on a more positive note here is the original ‘jumping of the shark’ video:
Image thanks to the amazing Todd Barnard & creative commons.
