Groupon has sold USD500m of equity in the firm to investors in the first stage of a planned USD950m funding, according to an SEC filing. Though details of the funding were not disclosed, investors in the daily deals site reportedly include Digital Sky Technologies, Morgan Stanley and Fidelity Investments. The move comes just weeks after Groupon turned down a reported USD6bn buyout offer from Google, and comes amid fresh claims that the site aims to go public by the end of 2011.

    The new funding round gives the firm the option to raise almost USD1bn, and reportedly values stock in privately-owned Groupon at USD31.59 per share. This gives the firm an estimated valuation of between USD6.4bn and USD7.8bn, depending on whether all USD950m of the stock options are issued. According to the SEC filing, Groupon plans to use USD344m of the initial USD500m to compensate the firm's executive officers and directors by buying back shares in the firm. This could result in a large payout for executives including Groupon CEO Andrew Mason and board members such as former AOL exec Ted Leonsis.

    Though Groupon has not announced the latest investors, a TechCrunch report claims that Digital Sky Technologies took a "big chunk" of the round with Fidelity Investments and Morgan Stanley also contributing. The tech blog also claims that the funding round should be closed and concluded "in a few weeks".

    Groupon last raised USD135m in April from Battery Ventures and Facebook investor Digital Sky Technologies, in a deal that reportedly valued the company at more than USD1bn. In recent weeks, the firm is rumoured to have been looking to raise new cash following its refusal to agree a buyout deal with Google. It also recently hired its first CFO – former Amazon finance head Jason Child.

    According to a New York Timesreport, the new funds suggest that Groupon is preparing to float on the stock market before the end of the year. The paper reports that the firm is already negotiating financing commitments with Fidelity Investments, Morgan Stanley and T. Rowe Price.        Previous reports claim the deals site will make a decision on whether it will aim to go public during 2011.

    The new financing comes as competition in the daily deals space continues to heat up. Last month retail giant Amazon invested USD175m in Groupon rival LivingSocial. Google is also hotly tipped to enter this space by either shifting its target to a smaller rival in this space, or by building a similar service of its own.