Offers.com nabs $7M in first-round funding as online coupon sites battle

Discount deal site Offers.com said today it has closed first-round funding of $7 million as it seeks to add more staff and take on an already-crowded online coupon marketplace.

Unlike the spate of online deal site fundings we’ve seen over the last two weeks, Offers.com focuses less on “deal of the day” social or luxury buying, and more on customer-specific coupons for Main Street-type retailers like JCPenney, Kmart and the Home Depot.

Offers.com does this by offering an onsite algorithm-driven search engine, the Locker, which asks users what kinds of stores they shop at, what sorts of interests they have, and where they would most like to see deals.

It also differentiates itself by having a staff of editors that verify, rate, categorize and update all offers on a daily basis—perhaps making it more user friendly for the average coupon-cutting consumer who might be accustomed to a variety of stores and offers listed all in one place.

Competitors include CouponMom.com, Coupons.com and RetailMeNot.

The funding comes in the form of a growth equity investment from private equity firm Susquehanna Growth Equity.

Offers.com was launched in 2009 and has been self-funded and in the black since its first year. It recently debuted sister sites in Canada and United Kingdom.

The Austin, Texas-based firm said it believes its main appeal lies in its deals being completely up to date, as opposed to other sites that may offer discounts that expire or are no longer relevant.

“Nothing is more frustrating to a consumer than trying to use out-of-date, inactive or useless coupons online, which is why we spend the time and money to validate every offer on our site, ensuring a high-quality user experience,” said Steve Schaffer, founder and CEO of Offers.com.

Its expansion into new markets is part of larger plan to target consumers who want deals from relevant, big-box retailers as the recession drags on, the company told VentureBeat.

“Since launching Offers.com we have focused on quality and growing organically,” said Schaffer. “The recent popularity of local deals sites and consumers increasing use of online coupons has greatly expanded the market. However, the market remains highly fragmented, and we think the time is right to accelerate our expansion and hiring plans. And we also plan to do some acquisitions.”

The company said its first infusion of outside capital will also be used for marketing, product management, product development and the hiring of 20 new full-time employees over the next year, a 50 percent increase.

Offers.com was advised on the transaction by Pharus Securities, a boutique investment bank for internet and digital media companies.

Philadelphia-based Susquehanna is a private equity group focused on investing in growth capital and buyout opportunities in information services, internet, software and financial technology.