Google’s recent bid for the group-buying start-up Groupon has fallen through, despite claims that the search giant offered as much as $5 billion for the company.
It was a potentially massive risk for Google, who whilst not short on cash, we’re putting a lot of faith in a relatively new company without a lenghty track record for success.
“Valuations certainly are rising for social start-ups,” said Augie Ray, social network analyst at Forrester’s. “The valuations are based on a great deal of speculation – these are not mature companies with long histories of stable revenue and profit.”
Though they have fingers in many pies, Google still haven’t secured a position in the growing local market, an area Groupon’s shopping and service deals are making great strides in. However, analysts are split on whether Google really require another company to enter this sphere, believing they have enough expertise to make their own moves
“They don’t need Groupon to do it,” said Forrester’s Sucharita Mulpuru. “There is nothing that Groupon has that Google couldn’t build themselves, or partner with one of the other half-dozen viable contenders in the space to get for a far cheaper price than Groupon’s.”