Groupon Founders Back Third LA Company in Lifecrowd
Just four weeks into its public beta, which we covered previously, social activity discovery marketplace Lifecrowd announced a $5 million Series A financing today.
The round was led by Lightbank and also included Bullpen Capital, Baroda Ventures, and Prism VentureWorks.
It's a vote of confidence in Lifecrowd’s ability to connect online users with one another around fun activities in the offline world.
Lifecrowd enables its users to browse activities ranging from rock climbing to wine tasting and then invite friends to join the outings, which are led by other members of the community. The service is currently available in San Diego, Orange County, San Francisco, and its home market of Los Angeles, but several other major metropolitan areas are planned to open throughout the year.
Founder Bong Koh and his team are gaining some significant advisory muscle in the local and social arenas in addition to the capital infusion.
Lightbank is a venture formed by Groupon co-founders Eric Lefkofsky and Brad Keywell. Their experiences -- both good and bad -- in developing the daily deals giant should be extremely valuable to this young company. One of the biggest lessons will hopefully be turning up the virality on its customer acquisition models.
Lightbank principal, Bill Pescatello, said that they had been looking into the online-to-offline and local activity discovery spaces for quite a while before coming across anyone who they felt was doing it right. “We’ve been looking for something more social," he said. "With Lifecrowd, unlike many of the others, you can see that they are really capturing the innate emotions of the people involved. We believe that success is going to have much less to do with the activities or the instructors than it will the quality of the community built around them.”
The company was the first graduate of Santa Monica-based accelerator MuckerLab, where it received early financing and mentorship.
For Lightbank, a Chicago-based firm, this investment is the third deal completed in Los Angeles since its formation two years ago. The first is hot ecommerce site Beachmint -- a tough act to follow. Pescatello said that they are extremely interested in the LA market and have at least one more likely transaction in the queue for the coming weeks. (Know who it is? Email: tips at PandoDaily dot com.)
My initial concern about Lifecrowd was whether it would be able to differentiate among a sea of imitators and competitors. One of many such variants is the recently launched HowAboutWe, which focuses on offering date activities to singles and couples.
Another challenge in this sector is the geographic expansion of what is an inherently local concept. Lifecrowd hopes its strategy of promoting local evangelists and tastemakers as “Elite Crowders” and rewarding sharing activity will promote virality, a strategy similar to Yelp in the early days.
Given the network effects required in each city and the importance of community stressed above, patient and deliberate growth is likely a good strategy. Not all investors are interested in patient and deliberate.