BusinessWeek broke the news of the Series D funding round early on Thursday, an article that was quickly followed by a post from founder Dennis Crowley on the official Foursquare blog — entitled “Continuing Foursquare’s Growth” — and posts from two separate partners at one of the company’s main financial backers, New York-based Union Square Ventures.

Crowley compares the challenges to Google

In his post, Foursquare founder and CEO Crowley describes the challenges ahead — including some fairly dramatic technical challenges, such as the need to index and filter more than 3.5 billion check-ins and other location data in something approaching real time, in order to successfully recommend to users a restaurant or other business that fits their needs. Crowley compares it to the kind of data wrangling that Google has to do in order to provide search results:

“To us, this is like when Google came and revolutionized web search. Suddenly, you could find things on the internet. The real world is the same way. Four years ago when we started Foursquare, it was really hard to discover a new retro arcade that opened up on a side street, or to make sure you weren’t overlooking the best dish on the menu, or to know a good friend was just around the corner. Sometimes, we think of Foursquare as having the ability to give people superpowers for exploring the real world.”

In a post at the Union Square Ventures blog, Albert Wenger talked about the potential for Foursquare to capitalize on its new focus as a platform for discovering local businesses — something GigaOM’s Eliza Kern highlighted in her post on the newly redesigned Foursquare app, which launched on Wednesday. In effect, the company is going head-to-head with local recommendation services like Yelp, and giving up its earlier focus on “gamification” elements like mayorships and badges.

Debt instead of a lower valuation

Union Square Ventures partner Fred Wilson, meanwhile, wrote a post on his own blog about the fact that Foursquare chose to (or was forced to) use convertible debt rather than equity. As Wilson explains, this kind of late-stage debt issue is often used when a company doesn’t want to (or can’t) raise equity because doing so would involve a “down round” — in other words, raising money at a lower valuation than it was given in earlier rounds. As he described it:

“Both of our firms have been investors in Foursquare for several rounds and both of us own a meaningful stake in the company. Valuation is somewhat immaterial to us as our stake in the company is not going to increase much in this round of financing. But valuation is very material to the Foursquare management team because $41mm of capital is going to be dilutive at any valuation that would make sense here.”

As Foursquare has evolved from being a fresh young startup with the hot iPhone app — which it was in 2009, when it launched at the SxSW festival — into a four-year-old company that has raised a total of $70 million in three separate rounds, it has faced increasing pressure to prove that it has a real business, along with questions about whether it can ever justify its earlier valuation, which was in the $600 million range. In a report in January, private-company research firm PrivCo argued that Foursquare could go out of business by the end of the year unless it raised more money.

In a much-publicized spat on Twitter last month, investor Keith Rabois — a former PayPal founder who is a backer of Foursquare competitor Yelp — said Foursquare’s only option was to be acquired, because it had failed to back up its valuation with any real business success.

@dens @sriramk @hunterwalk great use of jargon. Maybe Hail Mary Bebo-style acquisition will bail you out.—
Keith Rabois (@rabois) March 16, 2013

Foursquare needs to prove it is a business

Foursquare’s biggest problem is that it hasn’t been able to generate any meaningful revenue from the millions of users and partnerships it has announced over the past couple of years — according to an anonymous source quoted in the BusinessWeek article, the company had revenue last year of just $2 million, which makes a $600-million valuation look almost ridiculous. According to Crowley, much of the new financing will be used to develop advertising products that can run next to Foursquare’s local recommendations.

Despite its inability to produce revenue, the company’s supporters remain optimistic about its chances of building a truly large-scale and profitable local recommendation service. Hunter Walk, a former YouTube staffer turned venture capitalist, said on Twitter “All I know is the financing allows them to continue building a product I love,” and Shai Goldman of the 500Startups angel fund said: “I hope they figure out how to monetize, I’m a fan.” Even John Lilly of Greylock Partners, which didn’t invest in the company, said on his blog that he thinks Foursquare has a chance to build a real business:

“What does matter is that they raised the money they need to give this a real go. I have high confidence in these guys that they’ll do well and build interesting products and a great business for a long time.”

Others, however, were less complimentary — and many seem to see Foursquare as a high-risk bet, much like email-offer flameout Groupon:

.@mdudas @jackgavigan @rabois @bijan I can only hope foursquare goes public. I didn't short Groupon nearly big enough.—
Rakesh Agrawal (@rakeshlobster) April 11, 2013

Post and thumbnail photo courtesy of Pinar Ozger

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If Reddit does manage to raise enough venture funding to give itself a half-billion-dollar valuation, it would mark an incredible reversal of fortune for the company. Not that long ago, Digg was the superstar online community, the one that drove massive amounts of traffic to any link that was shared on the network — the one whose cofounder appeared on the cover of Businessweek magazine behind the title “How this kid made $60 million in 18 months.” Reddit, by contrast, was a much smaller phenomenon, and was quietly acquired by the Condé Nast magazine empire in 2006. (Reddit was spun off as a separate entity in 2011, but Condé Nast retains control).

As Digg went through a number of redesigns that ultimately drove away many of its hardcore users, Reddit continued to grow steadily, thanks in large part to a hands-off approach by its parent — something Steve Newhouse (chairman of Advance Publications, which owns Condé Nast) described in a recent interview with the New York Times. Reddit also became known for its community-driven innovations, including the “Ask Me Anything” feature. (Reddit general manager Erik Martin will be part of a panel on new-media entities, along with Jonah Peretti from BuzzFeed and Chris Mohney from Tumblr, at our paidContent Live conference in New York on April 17).

Can Reddit grow without suffering Digg’s fate?

By the time Digg came apart last year and was sold off in pieces to the Washington Post and Betaworks (which has since re-engineered the service), Reddit was by far the dominant player. And the community — which added a CEO last year with the hiring of Yishan Wong, a former Facebook engineer — has continued to hit new heights over the past few months: it engineered an “Ask Me Anything” interview with Barack Obama, and traffic has continued to grow at a phenomenal rate. But the site is clearly looking for ways to improve its revenue as well — Wong announced a membership drive last year that was designed in part to avoid the need for more intrusive advertising.

As a number of observers have noted, much of the content that appears on BuzzFeed — and drives massive amounts of traffic to the site’s viral posts — originates at Reddit. That fact can’t have escaped the company’s attention (BuzzFeed is valued at about $200 million, based on its most recent financing round). So why not try to build on that by expanding the reach of the network and taking advantage of the user-generated content it produces, instead of letting others like BuzzFeed get all the benefit? Raising venture funding would give Reddit some funds to accomplish that, and give Condé Nast a payoff for the money it has invested in Reddit since the acquisition.

For Reddit, one of the big challenges of this approach is that trying to turn the community into more of a mainstream media entity risks damaging the somewhat anarchic personality that gives the network most of its unique character. In some cases, that personality veers into outright offensiveness — as it has with some of the “sub-Reddits” run by notorious Reddit troll Violentacrez. Wong has said that Reddit is committed to free speech even when it is offensive to some, but maintaining that commitment is going to be harder once VCs get their hooks into the company.

Digg suffered from a number of fatal flaws. One of them was embarking on a series of redesigns that appeared to be driven by financial motives rather than user demand. If Reddit can achieve a half-billion-dollar valuation and continue growing as a media entity without falling into that particular black hole, then its transformation into a social-media superstar will be complete.

Post and thumbnail images courtesy of Shutterstock/Africa Studio and Flickr user jphilipg

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Both MetroPCS and Leap Wireless’s Cricket Communications recently launched financing programs of their own to encourage their prepaid customers to buy high-end devices like the iPhone 5, FierceWireless is reporting. Metro and Leap executives both told Fierce that they are working with Progressive Financing – MetroPCS is additionally working with BillFloat – to offer low, up-front payments on otherwise expensive devices, making up the balance through monthly installments.

Cricket customers can walk out of the store with an iPhone 5 — which Leap normally sells partially subsidized for $500 — for $105. Customers will wind up paying more for the device via interest and repayment fees, Fierce reported, but neither BillFloat nor Progressive require a credit check, which fits well the carriers’ prepaid business model. Instead, the companies withdraw payments directly from a bank account.

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For merchants who participate, they will be able to offer Bill Me Later as an option at checkout and will get paid right away from PayPal. There is no upper limit for how much people can finance using Bill Me Later, and the transaction is approved or denied within about one minute. If a consumer takes longer than six months to pay off their purchase, they will pay an annual percentage rate of 19.99 percent.

PayPal is also providing business owners with 18 different types of banner ads that can be easily inserted into their home page or check-out page to highlight the Bill Me Later option.

This should be helpful for consumers who might be a little hesitant to make bigger purchases due to the tough economy. For businesses, offering Bill Me Later could push someone to add a few more items to their shopping carts if they’re short of a the $99 threshold. Forrester Research found that 43 percent of Bill Me Later sales are in addition to regular online sales and offering Bill Me Later boosted average order sizes by as much as 75 percent.

Previously, Bill Me Later was included as a funding source in the PayPal wallet, but it was almost always used by large retailers and enterprise customers. The financing offers were not consistent from one retailer to another. And merchants didn’t have a simple way of advertising the Bill Me Later option.

PayPal has been testing Bill Me Later with some small merchants and some are reporting larger average purchases through the service and a bigger percentage of sales flowing through PayPal as well.

By expanding the use of Bill Me Later, PayPal continues to show how it can become an alternative to traditional credit cards. And it demonstrates how PayPal’s purchase of Bill Me Later in 2008 is now paying off for the online payment giant. Morgan Stanley noted in March that Bill Me Later improves PayPal’s transaction margins because it’s paid off through ACH transfers or check; it generates substantial income through interest and helps eBay monetize its off-shore cash, which it uses to cover Bill Me Later transactions.

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Quantenna specializes in high-performance Wi-Fi silicon and is already selling its 802.11n chips to router makers like Motorola and NetGear. Utilizing four antennas to deliver four parallel streams of data over the same 5 GHz frequencies, Quantenna boasts it can deliver speeds of 600 Mbps, ideal for supporting multiple HD-streaming video channels in the home — the market the vendor has primarily focused on.

But truly ridiculous speeds will emerge with its next generation chip, which uses the new 802.11ac standard and promises bandwidth as high as 2 GB by aggregating all of the 2.4 GHz and 5 GHz frequencies available for public Wi-Fi. As my colleague Stacey Higginbotham points out a 2 Gbps connection is a bit useless in a home, because no residential broadband connection supports such enormous speed. But once you take the technology out of the home and into the wild there’s a lot more potential for bandwidth mayhem.

Mobile hotspot providers with access to the fiber connections could take advantage of 802.11ac technologies to build commercial Wi-Fi networks with truly stunning levels of broadband capacity. Mobile operators are getting Wi-Fi religion, and chips like Quantenna’s could be used to shunt enormous quantities of traffic off their overtaxed 3G and 4G networks. The key is getting those high-performance chips not just into the routers but also laptops, tablets and smartphones.

Fremont, Calif.,-based Quantenna has already gone through multiple funding rounds, closing a $21 million Series E round in September of 2010. Today’s $79 million oversubscribed round includes its existing major vendors Sequoia Capital, DAG Ventures, Sigma Partners, Southern Cross Venture Partners and Venrock Associates, as well as new investors Rusnano and Bright Capital. Rusnano, which will invest up to $40 million, isn’t just bringing cash, but also a lot of expertise in the form of nanotechnology research. The firm is an arm of the Russian government tasked with investing in and coordinating efforts between Russian nanotechnology ventures.

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It sounds like a great idea: change the federal legislation that governs investing in startups and small companies so that they can raise money from just about anyone, instead of being restricted to a small cabal of investment firms, venture capitalists and angel investors. That idea gave rise to what is now known as the JOBS Act — a bill that is making its way through the Senate this week and could become law in a matter of days. But is the new legislation really going to help startups and the economy as a whole, or is it just going to increase the number of stock scams and help fuel a dangerous kind of bubble mentality around investing?

In a sense, the JOBS Act is an attempt to take the lessons learned from new startup-financing engines like Kickstarter — which has raised millions of dollars for everything from iPod-based watches to graphic novels and dozens of independently-produced movies — and apply them to the economy as a whole. Supporters such as AOL founder Steve Case (now the chairman of the Obama-created Startup America project) and a startup-financing matchmaker service called AngelList argue that if more startups and small businesses can raise funding at an earlier stage, greater numbers of them are likely to succeed.

Startups could raise more without going public

The Act, an amalgamation of similar bills that have been put forward in both the Senate (PDF link) and the House (which passed its version earlier this month), would make a number of changes to existing securites regulations in order to make it easier for startups — or “emerging growth” companies, as the bill calls them — to raise money from a broader group of people. For one thing, it would increase the number of shareholders a company can have before it has to file public financial documents, from 500 to 1,000 (a rule that has helped push companies such as Google and Facebook to go public). The bill would also:

• Allow small businesses to sell up to $10,000 in stock to “non-accredited investors,” provided it doesn’t amount to more than 10 percent of their annual income.
• Allow small or emerging growth companies to publicly advertise for investors for the first time.
• Phase in financial reporting and regulatory compliance rules over five years for small companies that have gone public

As CNET’s Rafe Needleman points out, these changes will allow some of the incubators and other startup-funding platforms that already exist — including AngelList and the funding competitions at conferences like Launch — to breathe a little easier, since many of them are skirting the rules by publicizing attempts to raise funding by private companies or connecting them with funders. And it would allow platforms like Kickstarter and IndieGoGo (both of which the Obama administration has mentioned in its support of the legislation) to expand their range of offerings to include actual companies, and to share financial information with potential investors.

So what are the critics of the bill concerned about? One fear is mostly philosophical, in the sense that some believe reducing the barriers to investing in startups will encourage a gambling mentality, and that this could help to inflate a bubble that some are already worried may be occurring in technology stocks. The reason investing in private companies is currently restricted to “accredited” or “sophisticated” investors, they argue, is that these individuals are typically more restrained — and they also have a high net-worth and can afford to lose their investments.

Would the bill open the barn door too wide?

The other criticism, which has been raised by some Democrats despite the President’s stated intention to support the bill, is that the legislation would exempt many of the small companies covered by the law — defined as anyone with less than $1 billion in revenue — from the strict financial-reporting requirements that were introduced with the Sarbanes-Oxley Act in 2002. Even some technology industry and startup supporters (including my colleague Om) have said this goes too far, and would leave the barn door open for too many potential scam artists and hucksters. Senator Richard Durbin (D-Ill.) has said of the bill:

This half-boiled concoction of ill-conceived ideas skirts, evades, and nullifies investor protection in market transparency standards that were enacted in response to the dot-com crash, the Enron debacle, and the litany of bubbles and bursts that have cost legions of unsuspecting Americans their savings, their jobs, and their retirement.

The bill’s supporters argue that this same definition applies to virtually any public market for investing, including the stock market — since even with the regulatory restrictions and reporting requirements that are in place, stock scams and flameouts of public companies do occur. And since the investment limit for individuals is restricted to no more than $10,000 or 10 percent of someone’s net worth, the risk of anyone losing their life savings or going bankrupt because they funded a startup is relatively small.

The biggest problem with the Act seems to be the exemption of newly-public companies from the Sarbanes-Oxley reporting rules. Even many of those who support the idea of making it easier for startups to raise financing from individual investors don’t seem to like the idea of removing those reporting restrictions. Whether the beneficial parts of the bill can be separated from the riskier aspects remains to be seen, as it makes its way through the Senate and ultimately to the President’s desk.

Post and thumbnail images courtesy of Flickr users Mark Strozierand Cliff

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Over the past few years, we’ve seen the rise of “crowdfunding” services, such as Kickstarter, that allow musicians, artists and writers to raise small amounts of money for projects they can’t fund through traditional sources. What if that idea was extended to investing in small businesses of any kind? That’s the principle behind a bill that is working its way through Congress, which would allow entrepreneurs to raise up to $2 million from individual investors without having to be approved by securities regulators or do a traditional venture financing. But would this free up more entrepreneurial firepower to help the U.S. economy, or just cause chaos and confusion for investors and regulatory headaches for the government?

Known as the “Entrepreneur Access to Capital Act,” (PDF link) the legislation in question — which was amended by the House committee on financial services this week and now goes before the full House for discussion — would make it easier for small businesses or individuals who want to start a company to raise funds from investors. In a nutshell, the new law would exempt those investors from most of the regulatory tests they currently have to pass before they can invest in the shares of a private company, and allow them to invest through crowdfunding platforms like IndieGoGo and Kickstarter.

Is Kickstarter a model for economic growth?

The proposed law is related to the Obama administration’s “Startup America” plan, which is designed to help encourage entrepreneurialism as a way of stimulating the economy and creating more jobs. And Washington has made it clear that Kickstarter and other similar platforms are the model it wants to pursue, saying the plan means:

[R]esponsibly allowing startups to raise money through “crowdfunding” – gathering many small-dollar investments that add up to as much as $1 million. Right now, entrepreneurs like these bakers and these gadget-makers are already using crowdfunding platforms to raise hundreds of thousands of dollars in pure donations – imagine the possibilities if these small-dollar donors became investors with a stake in the venture.

Under current investment rules, only “accredited” or “sophisticated” investors can invest in what are called private placements: this group includes companies or partnerships with a net worth of more than $5 million; individuals or couples with a combined net worth of $1 million, and those who are insiders of the company in question — in other words, officers or directors — as well as investors who are working through a professional investment advisor (such as an accountant or attorney). And companies that raise money in this way are forbidden from advertising that they are looking for financing.

In other words, not only are the potential sources of funding for small companies currently reduced to a tiny proportion of the economy, but the startups that are most in need of these kinds of financing are prevented from advertising — even on Twitter or through social networks — that they are interested in raising money. They can take donations through Kickstarter and other platforms, as startups like the would-be Facebook alternative Diaspora have, but they can only provide gifts or products in return, not shares in the company.

Bill would give startups more funding options

The current rules lock most startups into a particular pattern: in most cases, their initial funding comes from friends and family, and then — if the business isn’t already providing enough free-cash flow — the company has to find individual “angel” investors (who meet all of the above tests) to get a larger amount of money to fund their growth. If they don’t fail at this level, then they typically move on to raising traditional financing from venture-capital funds, and if they grow large enough they do private placements with banks and brokerage firms, the way that both Facebook and Twitter have over the past year or so.

The proposed bill would allow anyone to invest in a company provided that that person didn’t contribute more than $10,000 a year — or 10 percent of their annual income, whichever is smaller. Companies that use this method would only be allowed to raise a maximum of $2 million, and if they raised more than $1 million they would have to provide audited financial statements. The House committee this week also added a requirement that these companies tell federal securities regulators when they are raising new funds, although they would not have to get approval, and a related bill would even let these companies advertise that they are looking for funding from individuals.

The idea is to lower the barriers to raising small amounts of money, in the hope that more entrepreneurs and small companies will choose to do this, and that they in turn will help create more jobs. Some observers, such as Dane Stangler of the Kauffman Foundation, have argued that the U.S. badly needs to encourage a “producer” economy — in which more people create their own companies and entrepreneurial opportunities — instead of the current “consumption economy.” And proponents of the new legislation such as the Startup Exemption group say the bill would help do this.

Critics of the proposed legislation, however, argue that it would create — or exacerbate — a kind of speculative attitude that is already a problem in technology markets when it comes to publicly-traded companies, and in private share-trading networks such as SecondMarket, where valuations of players like Facebook have soared as high as $70 billion. And many are concerned that lowering the barriers for entrepreneurs to raise money would also make it easier for fraud artists and others to take advantage of individual investors, which would in turn put more of a burden on regulators.

Can a principle that allows musicians to raise money for albums be extended to the U.S. economy as a whole? The answer seems to depend on whether you are an optimist or a pessimist about the value of crowdfunding in general, and social tools like Facebook and Twitter. If such tools can help some entrepreneurs raise money they need to create their own businesses, then why not make it easier for them to do so? Provided it is properly regulated, it sounds like just the kind of thing the U.S. economy could use more of.

Sure, it might encourage a bubble mentality and cause people to gamble on unproven companies — but then the traditional stock market already does plenty of that, and we’ve gotten pretty used to having that around.

Post and thumbnail photos courtesy of Flickr users Thing Three and quazifoto

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Twitter wants to be “the world in your pocket,” according to CEO Dick Costolo — but more than anything, it wants to be the engine of mobile and real-time commerce in your pocket, judging by his comments at the Fortune BrainstormTech conference in Colorado on Tuesday. In addition to downplaying the departure of the company’s two co-founders Ev Williams and Biz Stone, and complaining about the “distraction” that private trading of its shares causes, Twitter’s chief executive said the company sees a future in “removing friction” from e-commerce and allowing companies to target their users directly in real time, something he said “has never existed before.”

In his talk with Fortune writer Adam Lashinsky (video embedded below), Costolo noted that while Twitter took three years to get to one billion tweets, it now sees that many messages posted to the network every five days. He also said that there are more than 200 million registered users of the service (defining “active users” is difficult, if not impossible, he argued) and that third-party analytics show that the Twitter.com website gets more than 400 million unique visitors a month. Costolo added that Twitter is seeing 40-percent growth every quarter in terms of mobile users.

While many media outlets have focused on the recent departures of co-founders Evan Williams and Biz Stone, the Twitter CEO said that the company has been busy building up its senior management team, and that working alongside co-founder Jack Dorsey (who is also CEO of mobile-payment company Square) has been good because he “speaks with the fluency of the inventor of the product.” He said that the private trading of Twitter shares, which has valued the company at close to $7 billion, is a distraction in part because “I worry about people who might be buying through those markets [and] who’s going to get in trouble at the end of the day if it doesn’t work out.”

But Costolo also spent much of his time talking about where Twitter sees future revenue and profit opportunities — in addition to the ongoing rollout of advertising through “promoted tweets” and “promoted trends,” as well as a forthcoming self-serve ad product (how users respond to these efforts remains to be seen). The Twitter CEO said that the company sees a number of opportunities when it comes to enabling — and taking a share of the revenue from — direct e-commerce with users via the service, because “we already see a tremendous amount of commerce taking place on the platform.”

As an example, Costolo talked about how Google tweeted a promotion code that people could use for tickets to its recent IO conference, and about 100 tickets sold in a little over 10 minutes. “That’s $55,000 with one tweet in 13 minutes,” said the Twitter CEO. In another example, the San Diego Chargers tweeted about tickets that were left for a game, and in a little over half an hour they were gone. The upshot of all of that, he said, is that “there’s a commerce opportunity there for us to take advantage of if we want.” Although he didn’t give any specifics, the Twitter CEO said that the company is asking “how can we remove friction from [that] process?”

And what about Google+? Costolo said that while he believes Google “will leverage their tremendous reach to pull people into this experience,” he isn’t focused on competing with the service, but instead sees Twitter as “offering simplicity in a world of complexity.” The Twitter CEO also confirmed that the company will likely raise money soon to provide funds that it can put into building up its infrastructure (there have been rumors that it is raising a new round of venture financing that will value the company at $8 billion) but he wouldn’t say whether it will be a public offering or a private financing.

Can Twitter manage to make the transformation from being a real-time information network to being a platform for real-time commerce? Costolo seems to be betting the company’s future — and his own — that it can.

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“You know what’s cooler than a million dollars? A billion dollars.” Fans of the movie The Social Network — especially those who live in Silicon Valley — like to recite that line a lot, and now Groupon gets to feel how cool that really is, thanks to a new round of funding. As expected, the group-buying startup announced today that it has completed a gigantic financing of $950-million from a group of high-profile funds, including Andreessen Horowitz, Kleiner Perkins and Russia’s Mail.ru. In the company’s typical whimsical fashion, its press release was headlined: “Groupon Raises, Like, A Billion Dollars.” As light-hearted as its founder and copywriters may be, however, the company now has some serious work to do in order to justify its funding.

It’s not just that Groupon has to show why it is worth an investment of close to $1 billion from such a prestigious group of backers (less than a year ago the entire company was only worth $1 billion). The two-year-old startup also has to show why it was right to turn down a $6-billion acquisition offer from Google, which it did last month to the surprise of many. Not only was such a combination seen by some (including us) as a natural fit for both companies — since it would have married Google’s algorithmic expertise and reach with Groupon’s appeal to local merchants and advertisers — but the valuation it gave Groupon was also more than $1 billion higher than the $4.7-billion value the company reportedly has as a result of its latest financing round.

In its news release, Groupon notes that it has been called “the fastest growing company ever” by Forbes, and that it is now doing business in 500 individual markets (up from just 30 markets in 2009) in 35 countries. It also has more than 50 million subscribers, an increase of 2,500 percent from where it was a year ago, and revenues that are said to be in the $2-billion range annually — although the company doesn’t keep all of that money, since it shares revenue with the retailers whose offers it sends to subscribers.

Another thing that Groupon has, however, is competition — and potentially lots of it. Google, for example, is likely to be focusing its energies on building its own Groupon-style connections with local merchants in the wake of the company’s rejection of its takeover bid. Long-time Google executive Marissa Mayer has taken over responsibility for the company’s local efforts, among other things, and while the search giant may try build its own local powerhouse from Google Place Pages and Hotpot and so on, there is also a chance that it might acquire one of Groupon’s competitors as well.

On top of Google presenting a competitive threat, there is also Facebook, which has experimented with Groupon-style discounts via Facebook Places, and could quite easily leverage its 600-million-user reach to compete with the company if it wanted to. And then there are competitors such as LivingSocial, the second-largest group-buying player, which recently got a $175-million investment from Amazon — another company that has the deep pockets and the reach to compete with Groupon — and Tippr, which has a white-label platform that allows merchants and website publishers to run their own Groupon offers, with Tippr handling all of the back-end and support.

The money the company has raised definitely elevates co-founders Andrew Mason and Eric Lefkofsky into the startup stratosphere (a chunk of the funding was used to compensate executives and investors who got in earlier, according to a securities filing a little over a week ago, including the two founders and a board of directors that includes ex-AOL executive Ted Leonsis and 37signals founder Jason Fried). But it also increases the pressure on Groupon to prove that it can carve out a long-term business amid escalating competition, and that it isn’t just the flavor of the month.

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Post and thumbnail photo courtesy of Flickr user Groupon

E-books and tablet-based digital textbooks may be the cool new thing, but renting old-fashioned paper textbooks still seems to be attracting plenty of interest: Chegg, the leader in the textbook-rental market, just closed a new $75-million round of financing from an Asian investment company, according to multiple reports. The funding from Ace Limited of Hong Kong brings Chegg’s total war chest to almost $220 million.

Chegg closed a $112-million investment round last November, a combination of equity and debt financing led by Insight Venture Partners. The textbook-rental company has also gotten financing from Kleiner Perkins Caufield & Byers, Gabriel Venture Partners, Primera Capital and Foundation Capital. Another textbook-rental company, BookRenter, also got financing last fall, although it was a much smaller amount: the startup raised $6 million from Storm Ventures and Adams Capital Management, and added Netflix co-founder Mark Randolph to its board.

Chegg co-founder and CEO Osman Rashid isn’t putting all of his bets on printed textbooks, however: he is also one of the backers of a new digital textbook startup called Kno, which plans to launch a two-panel tablet computer dedicated to interactive electronic versions of textbooks. Kno raised $46 million in financing earlier this month in a funding round led by Andreessen Horowitz. The company says that it hopes to have its tablet device on the market by the end of this year, and has formed a partnership with several leading textbook publishers, including Wiley & Sons and McGraw-Hill.

Another startup that is going after the digital textbook market is Inkling, which is using the iPad as a platform for interactive textbooks, and recently launched its app — which includes 3D interactive graphics and other features. Inkling, which was founded by a former Apple employee, has also received funding from venture groups such as Sequoia Capital, Kapor Capital, Sherpalo Ventures and Felicis Ventures (the investment fund started by early Google staffer Aydin Senkut), although the company has not specified the exact amount of that financing.

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Post and thumbnail photos courtesy of Flickr user Christine Chan