RealTime IT News

Kozmo.com Secures $100 Million in Financing

Amazon.com Inc. Tuesday lead a group of investors pouring $100 million into Kozmo.com Inc., which delivers movies, snacks and other items purchased over the Net to homes.

Amazon's (AMZN) $60 million investment amounts to a 23 percent stake in Kozmo, with the other investors acquiring one-third of the company, according to the Wall Street Journal.

Amazon officials declined to confirm the investment. People involved in the financing told The Journal nearly $30 million comes from an affiliate of Softbank Corp. of Japan, which has been an active backer of Internet businesses.

Kozmo could be valued at $300 million after the capital infusion. In October, the company won $28 million from venture investors including Flatiron Partners of New York; Oak Investment Partners of Palo Alto, Calif., and the Chase Capital Partners affiliate of Chase Manhattan Corp., New York. Kozmo was valued then at less than $100 million.

The identities of the remaining investors weren't available. The latest financing comes seven months after Kozmo began expanding outside its original New York City market. Kozmo also offers its service in Seattle, San Francisco, Boston and Washington, D.C. The company plans to enter 21 more markets by year end.

Though Kozmo.com's deliveries usually arrive within an hour, detractors say its 1,000 bicycle messengers can't compete with the sure-fire, long-standing reputations of United Parcel Service and Federal Express. But consumers who have benefited from the quick delivery service may appreciate Kozmo.com's method of immediacy. This way, consumers do not have to deal with powerhouse delivery companies who show up and leave if customers are not home to receive their goods.

Kozmo was founded by Joseph C. Park, a 28-year-old former employee of New York financial-services concern Goldman Sachs Group Inc. Recently, the company hired executives from Federal Express, of Memphis, Tenn., and Ethan Allen Interiors Inc., a Danbury, Conn., furniture maker and retailer, to handle the logistics of its growth. Kozmo also has been expanding its product mix. While the service initially focused on books, music, video and digital-video-disk rentals, Kozmo has branched out to offer everything from batteries to Tylenol and Krispy Kreme doughnuts.