Two of Groupon’s co-founders, (left) Eric Lefkofsky and Andrew Mason. Brad Keywell, the third co-founder, not pictured. Groupon’s IPO was at the Nasdaq Market in New York on Nov. 4, 2011.

Russian investors, Facebook Connect and Groupon’s sprint to a $1 billion valuation

Two years ago, Russian oligarch Leonid Boguslavsky and Michael Angelakis invested $250 million in Groupon. Angelakis is the Chairman of the Board at the Federal Reserve Bank of Philadelphia and the former CFO of Comcast.

That same month, Groupon sold its Groupon Russian subsidiary to Boguslavsky “without receiving any proceeds” from the sale.

Groupon Russia was worth -$1.6 million at the time.

Boguslavsky renamed it Frendi and later merged it with Biglion, Groupon Russia’s main competitor that Boguslavsky’s investment firm ru-Net Holdings was heavily invested in.

He’s an original investor in Yandex, Russia’s version of Google’s search. He’s also the Independent Director of the Supervisory Board at Sberbank, Russia’s largest lending bank that’s half owned by the Central Bank of Russia. It was placed under U.S. sanctions in 2014 and 2018. Boguslavsky was put on the list of 210 prominent Russians with close relations to Vladimir Putin.

Dmitry Alimov was a managing partner at ru-Net. He graduated summa cum laude from the University of Missouri — St. Louis and got his MBA from Harvard Business School. He’s a former executive at TNT and Gazprom and currently the VP of Sputnik Technology Ventures. He previously worked for Russian oligarch Leonard Blavatnik at Access Industries.

He “originated and executed” ru-Net’s investment in

To gain entry into the Russian marketplace, Groupon bought, a Groupon copycat website that had only been in existence for six months. At the time, the Russian market was flooded with dozens of Groupon imitators.

Groupon bought for $50 million and renamed it Groupon Russia. In two years, it had 21 sales offices that offered deals in 70 cities across Russia.

The five co-founders stayed on for nearly a year before receiving buyouts in 2011. Each continue to play a role in Russia’s tech community.

Viktor Lysenko and Oleg Kozyrev left Groupon Russia and co-founded Rocketbank, a mobile app that provides financial tools to Russian consumers. In 2016, it was acquired by Otkritie, formerly Russia’s largest private bank.

Otkritie was the middleman used by Rosneft when it shorted the rouble to raise funds so it could pay on its $18 billion debt that was about to mature. Eventually, Otkritie took on so much bad debt, the Central Bank of Russia had to buy up 75% of the bank to save it from collapsing. It became the sole owner of the bank last year.

Interestingly, Rocketbank like Darberry, received its seed funding from U.S.-based investment firms. provided initial funding for Darberry and Runa Capital invested $2 million in Rocketbank.

Runa Capital is an early stage venture capital firm based in San Francisco. It was founded by Serguei Beloussov, Ilya Zubarev and Dmitry Chikhachev, three classmates from the Moscow Institute of Physics and Technology (Phystech). Andre Bliznyuk, the former head of Goldman Sachs Russia/CIS Equity Capital Markets Group, became a partner in 2011.

A year before Elena Masolova helped start Darberry, she co-founded Pixonic, a video game maker headquartered in Moscow. Its “War Robots” game has so far generated almost $200 million in revenue. It was acquired by Group for $30 Million in 2016. That year, it quadrupled its budget for paid user acquisition on Facebook and Google.

Masolova currently runs TokenStars, “the first blockchain project to tokenize celebrities.”

Alexey Chernyak is a mentor at the Moscow-based Founder Institute, a tech incubator that has launched 3,100 companies in more than 200 cities on six continents. He’s also the founder of, an incubator for blockchain technology.

Vadim Dmitrievich Fedotov is not a founder but was the CEO of Groupon Russia and its Ukrainian subsidiaries. (His grandmother was the chief radio director of the All-Russian State Television and Radio Broadcasting Company for 30 years.) He’s now managing director of digital entities for Gazprom Media Holding and chairman of its Digital Committee.

Groupon’s investment in Russia was during a period when the startup was pursuing a rapid worldwide expansion. At the time, it was the fastest growing company ever.

The expansion couldn’t have happened without the involvement of Russian billionaire Yuri Milner’s Digital Sky Technologies (DST).

Russian oligarch Alisher Usmanov is heavily invested in DST. While he was director at Gazprom Investholding, the investment arm of Gazprom, the company invested at least $900 million in Facebook through offshore intermediaries and DST. In 2009, he invested $200 million in Facebook.

Gazprom Investholding is known to be an entity “used for politically important and strategically important deals for the Kremlin.” Usmanov has invested more than $1 billion in DST.

In 2010, less than a year after DST partnered to invest $300 million in Facebook and Zynga, Milner led a $135 million investment in Groupon. He’d already partnered to invest $30 million in Groupon the year before through his SV Angel Fund.

Incidentally, Tencent Holdings, China’s largest gaming and social media company, announced it had invested $300 million in DST the week before.

At the time, Groupon co-founders Andrew Mason, Eric Lefkofsky and Brad Keywell were considering a new round of funding. So Lefkofsky mentioned it in a brief call with Milner and the next day he showed up in Chicago. The deal was done a few hours later.

Groupon immediately began an aggressive international expansion. Within six months, it moved into 80 more markets in the U.S., Europe, Latin America and Canada.

A few months later, it purchased a majority stake in websites Qpod in Japan and Darberry. It also expanded in the Asia-Pacific region and added 69 more markets in North America and 12 more in Canada.

By the end of 2010, it had moved into 35 countries and grown its subscriber base by 2,500% to 50 million. It ultimately operated in more than 49 countries in 500 cities.

Google offered $6 billion for Groupon, but the company rejected the offer claiming it wanted to remain independent.

In September, DST changed its name to Group. In December, Milner also took public. It raised $912 million on a $5.71 billion valuation. At that point, it owned 2.4% of Facebook, 5.1% of Groupon and 1.5% of Zynga. Each one had a valuation of at least $1 billion.

A month after its IPO, DST was part of another investor pool that raised $950 million for Groupon, giving it a valuation of $3.8 billion.

Groupon’s relationship with Mail.Ru grew closer as it announced it would be partnering with Russian website, a Facebook copycat, to sell Groupon deals in Russia. owns the website. Ilya Shirokov was the vice-president of Mail.Ru and the head of

At the time, serviced about eight out of every ten emails sent in Russia. Groupon had an exclusive in-body email advertising campaign with

With its IPO coming up in November 2011, Groupon decided it needed greater access to users’ personal information. It sent an email to its 83 million subscribers that it would be expanding its privacy policy to include the collection of additional user information.

It said it would expand the categories of “personal information” it collects and shares with affiliated companies, service providers, business partners, advertisers and merchants.

The shared user data includes contact information, email address, phone, postal address, mobile location, social media website account names and relationship information, including lifestyle and demographic information.

Groupon admits that once it shares the user data with a third party, it no longer controls that data and how it is secured.

“We encourage Groupon Merchants and business partners to adopt and post privacy policies. However, the use of your Personal Information by such parties is governed by the privacy policies of such parties and is not subject to our control.”

It said it would also be accessing Facebook Connect to review a user’s social interactions. This was perhaps always in Milner’s plans. His vision was for Facebook to be the “universal identity system for everyone on the Internet.”

“Facebook Connect is basically your passport — your online passport. The government issues passports. Now you have somebody else worldwide who is issuing passports for people…But who says issuing passports is government’s job? This will be global citizenship,” Milner said.

Zuckerberg announced Facebook Connect’s single sign-on at its Palo Alto HQ conference at the end of 2010. Mihir Shah, VP, GM of Groupon Mobile, appeared on stage to show how smoothly a user’s Facebook credentials could be entered to access Groupon. He also showed how Groupons app used geolocation to provide mobile users with deals local to wherever they were.

The next speaker was Justin Cinicolo, the GM of mobile for Zynga, who showed off its new Live Poker app that users could now access even faster because of its new single sign-on capabilities. Zynga was the second major U.S. startup DST invested in, sandwiched between Facebook and Groupon.

Zynga and Groupon were two of the first mobile apps to integrate with Facebook’s single sign-on. All three had fairly generous guidelines for the user data it felt it was legally allowed to share or sell. And none guaranteed keeping the data secure once it was transferred to a third party.

As single sign-on became more widely used, Milner’s DST and other Russian banks like VTB were dropping billion$ into more established online businesses like Twitter, Lending Club, Airbnb, Spotify and Alibaba. Facebook Connect now works on at least 15,000 “partnered” sites.

After Facebook’s sharing of user data with Cambridge Analytica came to light and the U.S. Congress began to investigate, Facebook was asked for responses to a series of questions by the U.S. House Energy and Commerce Committee.

As part of its written response, it admitted to providing developers an extended period of up to six months to re-work its code in order to meet Facebook’s new, stricter API data sharing rules. was one of the companies given additional time. Facebook has admitted that since 2009, had ran hundreds of apps on its old API, which allowed app developers to collect users’ and their friend’s data. It also admitted it gave at least 60 phone and other device makers access to large amounts of user data.

Groupon has made a number of other deals with Russian investors through the years.

In 2012, it bought Hyperpublic, a developer of public information databases that are made available to developers. Previous seed investors in Hyperpublic include Thrive Capital, the investment firm run by Josh Kushner, and Milner’s SV Angel.

Groupon co-founders Lefkofsky and Keywell also run Lightbank, a Chicago-based venture-capital firm. Lightbank and Milner have invested in several of the same startups: GetGoing, a website to help leisure travelers discover new getaways and Onswipe, software that enables publishers to bring their content to the mobile web. Kushner’s Thrive Capital is also an investor in OnSwipe.

Lefkofsky also co-founded Tempus, a startup that uses data analytics to improve cancer treatment. It’s currently valued at almost $2 billion. He also provided initial funding for InnerWorkings, a global print management provider. Brian T. McCormack and Rich Heis are its co-founders.

McCormack is the chairperson of the Garry McCarthy For Mayor committee. He’s donated $59,300.00 to McCarthy’s campaign thus far. McCarthy is the former Superintendent of the Chicago Police Department that was hired and fired by Chicago Mayor Rahm Emanuel.

Mayor Rahm Emanuel and former CPD Superintendent, Garry McCarthy, at a 2015 news conference. (Photo: Chicago Tribune)

One of McCarthy’s first campaign donations was $5,600 from Rudy Giuliani. He’s admitted that he and Giuliani have a special relationship after the experiences they shared during the 9/11 attack.

Giuliani recently endorsed McCarthy for Chicago Mayor.

He claims to be a Democrat but two DOJ civil rights investigations into his policing tactics suggest otherwise.

The DOJ investigation reported a pattern by the Newark Police Dept. of illegal stops and arrests, a disproportionate number of African Americans being arrested (75%), victim intimidation and use of excessive force.

The DOJ’s investigation into McCarthy’s Chicago policing tactics didn’t fare much better.

Civilian and officer witnesses, and even the accused officers are frequently not interviewed during an investigation. The questioning of officers is often cursory, and aimed at eliciting favorable statements justifying the officers’ actions, rather than seeking the truth.”

McCarthy was fired in 2016 after the Laquan McDonald killing by CPD Officer Jason Van Dyke. Within six months, he started his security firm, GFM-Strategies and signed a contract with Richard Simon, a former police sergeant who now runs United Security Services Inc.

Simon has known ties to the Mob. He used to work for Ben Stein, Chicago’s “King of Janitors.” Stein was a convicted felon and known mob associate. After Stein died, Simon took over his security companies. He now runs security and cleaning companies with thousands of employees working at convention centers, airports, hotels and hospitals.

His United Service Cos. used to handle the security and cleaning work at Rivers Casino. Two years ago, the casino was fined $1.65 million for, in part, its ties to Simon. McCarthy’s firm is located in the same building as Simon’s company headquarters.

A company related to Lefkofsky, the original investor in Groupon, donated $100,000 to Chicago Mayor Rahm Emanuel’s political campaign. Lefkofsky was appointed by Emanuel to the board of directors of World Business Chicago (WBC), a public-private partnership between Chicago and the business community to encourage investments in the city.

Chicago Sister Cities International (CSCI), started under former Chicago Mayor Richard M. Daley, is an organization that allowed Chicago to reach out to other cities to develop business deals that would benefit each city. It’s now a division of the WBC.

In 1997, Daley signed its first CSCI international agreement with Moscow Mayor Yuri Luzhkov. Through the years, the two cities have had numerous events to celebrate our cultures and work business deals.

In 2014, a delegation of WBC and CSCI members visited Moscow to “promote Chicago as a desirable location for Russian businesses and strengthen Chicago’s sister city ties with Moscow.”

Sergey Kislyak, Russian spy and spy recruiter, has visited the city on numerous occasions to attend and/or speak at CSCI events in an effort to foster social and business deals between Chicago and Moscow.

Here he is in 2009 at the Executives’ Club of Chicago to give a speech about “trade and commerce, the political relationship between the U.S. and Russia, and arts and culture.”

This was the same year Milner first invested in Groupon.



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