American grouped purchases giant Groupon is entering Israel and purchasing local coupon website Grouper, Calcalist reported Tuesday. The deal is estimated at $15 million – an impressive return for an initial investment of only tens of thousands of shekels by Grouper's founders: Dori Hilleli, Dotan Stav and Yuval Karjevski.
The three founders are expected to receive about $4 million each. Ido Pollak, CEO of the New Media division at RGE Group, may get $1-2 million.
Grouper was founded in March 2010, less than a year ago, and registered as a company in July. Since then it has become the biggest online grouped purchases company in Israel, selling more than 150,000 coupons. Its annual turnover amounts to more than NIS 2 million (about $565,000).
Grouper operates from Moshav Batzra in the Sharon region and has no external investors, according to the Registrar of Companies, apart from Ido Pollak.
Grouper founders Ido Pollak, Dotan Stav, Yuval Karjevski and Dori Hilleli (Photo: Adi and Eyal)
Yuval Karjevski, one of Grouper's founders, told Calcalist last week that he was inspired by Groupon when he established the company.
"I decided that it was an interesting model, and I wanted to convert it because I felt it would work well," he said. "In December 2009 I convinced Dori and Dotan to join, in March we were already online with the first deal, and we moved forward."
Many coupon websites were launched in Israel following Grouper. There are currently 19 active sites, including Baligam, Dealhayom, Yemama and coupon initiatives within existing websites like Ynet, Walla and Mako.
Hebrew ads launched in recent weeks have been directing internet surfers to a Groupon page, offering different discounts. Surfers who visited the site found an ad in Hebrew suggesting that they sign up for the service.
Huge internet brand within 2 years
Groupon is considered the biggest online grouped purchases website in the world today and one of the most popular brands in the internet world. On Monday, the company officially announced the completion of a $950 million funding round, valued at $4.75 billion.
According to reports, it rejected a $6 billion acquisition offer from Google several weeks ago. Groupon declared that the funds it raised would be used to expand its international presence. The company has 35 million subscribers in the United States.
The company, founded two years ago by entrepreneur Andrew Mason, offers online coupons granting 50-70% reductions on a variety of services, such as restaurant meals, spa treatments, hotel stays and even cosmetic treatments according to the subscriber's geographical location.
Most coupons are used for the purchase of services rather than products like computers, furniture or cellular phones. Recently a person even proposed to his girlfriend through the site.
The deal's execution depends on a minimum number of subscribers within a limited period of time, usually 24 hours. Grouper operates similarly, and its homepage includes, for example, 62% reduction on a teeth cleaning treatment, the original price being NIS 260 ($74). Almost 110 people signed up for this deal within 36 hours, while the deal's execution required a minimum of 30 subscribers.
One of Groupon's main shareholders is the Battery Ventures equity firm. One of its prominent partners, Scott Tobin, is an American Jew who immigrated to Israel about two years ago and is working to locate Israeli companies for investment purposes.
Battery has a growing presence in Israel. According to reports, it tried to buy control of Retalix and parts of Comverse in the past.
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