To: bobby beara who wrote (2897 ) 5/27/2000 5:03:00 PM From: Razorbak Respond to
"Web Investors Cutting Off Cash for Struggling Dot.Coms"As recently as a few months ago, dot.com companies found they could count on additional funding from investors when their money dried up, but today many Web investors are cutting off funding for losing dot.com enterprises, The Wall Street Journal reported. Companies such as Violet.com, Toysmart Inc. and Boo.com have seen their funding cut off, and many others are postponing their initial public offerings (IPOs) until they are doing better financially. Some venture capitalists see the current online turmoil as a natural shakeout of Internet companies only marginally performing - companies, they say, that would never have been funded without an IPO market that made cashing out early investments too easy. "As those companies are locked out of money, they're faced with a challenge - they either shut their doors, find a buyer or take cash at any price," said Michael Linnert, a general partner at Technology Crossover Ventures in Palo Alto, Calif. In addition, the companies are faced with the challenge of finding a buyer once the venture capital has dried up. While many start-ups have few assets beyond their domain name, some will possess technology licenses or real estate that other firms will want, "and the best way to do that is through bankruptcy," said Ken Klee, a Los Angeles bankruptcy attorney. Klee also said that bankruptcy law firms are gearing up to handle the expected increase in filings, although part of that fear stems from the latest rise in interest rates and the fear of an economic slowdown, Klee said. abiworld.org
