Having suffered a delayed launch, staff cuts and a series of disappeared finance
directors, Boo.com has confirmed that it is looking to raise another round of
Industry doom-mongers 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 £17 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 rumours 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,"