Collapsed internet retailer Boo.com looks certain to be rescued, but its liquidators warned that several other dot.com startups are on rocky ground.
At a press conference this afternoon Mick McLoughlin, one of two liquidators appointed from KPMG, said he thought it was a "cast iron certainty" that a buyer would be found for Boo.com, which went into receivership today.
He said 30 firms had already contacted KPMG about acquiring Boo.com in one form or another - entire going concern or sections. Interested parties will have to lodge a refundable deposit of £1m before close of business tomorrow. Twenty seven key staff are being retained during the administration of the company. Another 150 are on unpaid leave, but there have been no redundancies.
Boo.com is reported as having just $500,000 in cash reserves after burning $120m of initial funding within 12 months. The firm spent $25m in marketing alone and suffered a delay in the launch of its high tech website. McLoughlin said: "Given this much early interest and the fact that we have such a good product, I think it's a cast iron certainty that we'll find a buyer."
Boo.com's collapse has come as no surprise to KPMG, as they have been preparing for a major dot.com failure for the last 18 months. Shaun O'Callaghan, partner KPMG, said: "There are a number of similar firms whose business plans aren't living up to expectations. We're talking to them about restructuring their business."
Meanwhile, others in the industry, mindful of volatile share prices, have been keen to praise Boo.com's ambition while pointing out that the firm's demise was its own fault rather than being symptomatic of a malaise amongst dot.com retailers.
Julie Meyer, co-founder of First Tuesday, a forum for entrepreneurs to meet venture capitalists that has seen $150m in seed capital change hands, told vnunet.com: "We have to respect pioneers and those who take risks and are ambitious. The management team behind Boo had been successful previously and I can understand why venture firms invested in them. I would have."
"Nobody has it easy just because they're on the internet. No business is easy to launch and easy to run," Meyer added.
"The lesson to be learned from Boo.com is that startups should think about bringing in professional senior management as soon as possible. Perhaps the founder shouldn't be the chief executive, perhaps a chief financial officer should be put in place early to keep track of where the money's going," she said.
Mark Simon, founder and CEO of The Chemistry, also an entrepreneur/investor forum, commented: "In the case of Boo.com, the investors were seduced by the track record of the management team, due to their past successes. But there were serious errors. In my opinion, the website was over-engineered, the concept was completely unproven and they made mistakes that traditional retailers would never make."
However, Business to Consumer stocks have plunged over recent months as confidence in technology shares evaporates. Just last month research firm Gartner predicted many dot.com ventures would burn through their remaining cash reserves within eight months as marketing and technology costs far outstripped the fledgling firms' first trickles of revenue streams.
"This signals the start of the dot.com shake-out. There will be others," added Simon.
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