Groupon Inc Co-Founders Invest $1M In Iowa City Start-up

Groupon Inc (NASDAQ:GRPN)’s two co-founders, who head an investment firm in Chicago, have chosen to invest $1 million in ClusterFlunk, a start-up based in Iowa City, according to a report from Press-Citizen. A.J. Nelson and Joe Dallago, alumni of the University of Iowa, are the brains behind ClusterFlunk.

Funding used to build a team

The money raised will be invested for the purpose of making substantial improvements to their business, and for this they will hire talented and efficient developers. The major activities undertaken will be building new features and expanding the virtual space that would enable them to reach more colleges.

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“We are planning to build out a team, first and foremost,” Nelson said. “It’s a celebration, but (the money) is a means to the end.”

ClusterFlunk offers services to the students that enable them to take their educational and career related decisions after considering all the factors that may affect their decisions. For this, they can socialize online and get important information and feedback about the courses offered in the colleges falling under 15 major universities that include many big names like the University of Iowa, Auburn University and University of Florida. Students can reap huge benefits in their studies from this site as it enables them to interact with a large set of people and, also, facilitates easy sharing of notes and uploading files and other relevant information by making use of instant messaging.

Groupon gets a rare upgrade

Recently, B. Riley analyst Sameet Sinha upgraded Groupon from Neutral to Buy citing improved operations, which could drive more organic growth. Analysts have raised the price target from $6 to $9.50 per share, which represents a massive upside from the current trading price. In the report, Sinha stated that management issues have been troubling Groupon for quite some time now, and expect the same problems to trouble the company going ahead. As per the analyst, the upgrade primarily reflects the management’s ability to execute on their promises, which are doable.

However, Sinha adds, “Management’s execution has been spotty, and points of failure are many, which could lead to the company missing its goals.”

Groupon shares have not been among the favorites since the company’s initial public offering. Year to date, shares are down over 45% while since IPO they have lost around 75%.