LONDON (05/05/2000) - Having suffered a delayed launch, staff cuts and a series of disappeared finance directors, Boo.com confirmed on Thursday that it is looking to raise another round of financing. Industry doomsayers saw the move as a final, desperate bid by lead investors to recoup some of the millions they sank into Boo during the heady days of last summer, when the so-hip-it-hurts company hit the big time.
Thanks to a $25 million public-relations and advertising blitz, Boo became one of the best-known brands in online retailing. Newspapers in Sweden, the homeland of founders Ernst Malmsten, Kajsa Leander and Patrik Hedelin, are reporting that the trio's heads could be on the block, as well. However, company officials deny that the new round of financing indicates a management shakeup.
"There's no truth in that whatsoever," says Dina Cholack, spokeswoman for Boo in London. "We are in the process of closing a new round of financing, but it's not final yet. We're constantly in discussions with our investors; we have nothing to release." Cholack added that the rumors that Boo is looking for a buyer are similarly overstated and that although the company is not in discussions with any specific buyer, it has not ruled out such an option.
"It is true that we're looking for some sort of resolution to the situation, but that doesn't necessarily mean a trade sale," she said. "With any business you have to evaluate your investment situation, especially a dot-com business." The primary investor in Boo is luxury-goods magnate Bernard Arnault's venture capital fund. Officials for the fund were unavailable for comment. All has not been well in the house of Boo for some time.
The company cut nearly 25 percent of its staff at the beginning of the year. In April, it saw its second finance director in two months go out the door. One former employee used the phrase "supremely chaotic" to describe the atmosphere at Boo. "What kind of startup employs 400 people before launch?" said the ex-staffer, who asked not to be named. Finance director Dean Hawkins resigned in April after just two months on the job. Hawkins had succeeded cofounder Hedelin, who had left the post in December while remaining on Boo's board.
Hawkins left to join Chello, a Dutch broadband Internet service provider that is readying itself for a public offering.
Technical problems also have plagued Boo. James Cronin, the company's technical director, says most of the early bugs on the cumbersome site have been resolved. At the time of launch, roughly 40 percent of the site's visitors were unable to gain access. Today, Cronin says, 95 percent of visitors can access the site. "The site is still a little slower than everyone else's but only fractionally," he says.