Groupon seeks to raise $750m in IPO

The prospectus includes a letter from co-founder and chief executive Andrew Mason that acknowledges Groupon's business model defies traditional measures of financial success.

Mason says its "path to success will have twists and turns, moments of brilliance and other moments of sheer stupidity". The document did not say how many shares would be offered or which shareholders will be selling.

Groupon was started three years ago and achieved revenues of $94m in its first year. Its revenues in the first quarter of 2011 were $644.7m, when it also spent $179.9m on online marketing aimed at boosting subscriptions.

Last year the firm lost $450m and Mason pointed out that growth targets might come at the expense of profit.

In the letter Mason said: "In the past, we've made investments in growth that turned a healthy, forecasted quarterly profit into a sizeable loss."

However, some analysts have valued Groupon for as much as $20bn.

The letter went on to explain, "we don't measure ourselves in conventional ways. It also outlined the risks inherent in its business, "although our revenue has increased substantially since inception, we may not be able to maintain our historical rate of revenue growth."

"We believe that our continued revenue growth will depend, among other factors, on our ability to..." It went on to list factors including attracting new merchants, retaining its subscriber base and increasing global awareness of its brand. "However, we cannot assure you that we will successfully implement any of these actions," it added.

Groupon sells money-off coupons on behalf of local businesses around the world. It has 83 million consumer subscribers and operates in 43 countries.

Last year, Google entered talks to pay up to $6bn for Groupon but was turned down. The company subsequently managed to raise $1bn from institutional investors.

The letter concluded: "If you're thinking about investing, hopefully it's because, like me, you believe that Groupon is better positioned than any company in history to reshape local commerce.

"The speed of our growth reflects the enormous opportunity before us to create a more efficient local marketplace.

"As with any business in a 30-month-old industry, the path to success will have twists and turns, moments of brilliance and other moments of sheer stupidity. Knowing that this will at times be a bumpy ride, we thank you for considering joining us."

Read more on Brand Republic's digital blog The Wall

As Groupon files for an IPO its $15bn valuation is questioned as analysts learn of losses