Letsbuyit.com Raises Cash, Doubles Share Price
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[London, ENGLAND] European co-operative purchasing Web site Letsbuyit.com has pulled back from the brink by raising EUR 4 million (US $3.7 million) from investors.
However, a Dutch court set a deadline of February 7 for Letsbuyit.com to raise EUR 28 million (US $26 million). This means the company will need substantially more funding, a fact understood by today's investors.
German venture capitalist Kimvestor has indicated that it could inject up to EUR 50 million in Letsbuyit, although negotiations are still proceeding.
Brave risk-takers were rewarded Thursday morning by seeing their shares in the almost-defunct Letsbuyit double in price.
Last week Letsbuyit's management said that there were "possibilities for survival," a statement that is proving to be correct. The company was granted a suspension of payments at the end of December 1999, after which its financial situation and prospects appeared to worsen.
The fundamental idea behind Letsbuyit.com -- on which fortunes are now being won and lost -- is for consumers to order large numbers of products in a virtual Internet department store through "co-buys." The company operates in the Netherlands, England, Sweden, Germany and Italy.
Despite Thursday's reprieve, Letsbuyit.com will need to work hard to restore the confidence of consumers and investors alike. Many customers have not had their outstanding orders fulfilled -- and were still unable to contact Letsbuyit on Thursday morning.
One influence that may have helped Letsbuyit was the extensive (if premature) "post-mortem" conducted by analysts and journalists following its collapse. Nearly everyone said it was based on a brilliant idea, and a few said it was simply underfunded.