22 May 2000

Former model Kajsa Leander and Ernst Malmsten, the Swedish founders of bankrupt e-tailer, have roundly blamed “risk-averse” investors for the venture’s failure, claiming that the company had just turned the corner but was denied the opportunity to prove itself.

Malmsten told Sunday Business: "I do not think the bankers understand the e-commerce area and how complex these companies are."

During its six months of trading, Boo blew its £80m ($120m) initial funding and also accumulated debts of some £17m ($25m). Bankers and investors called in administrators KPMG last Thursday, after refusing to provide Boo with an additional cash injection of $30m (£20m). Apart from the investors, the principal creditors are advertising and delivery companies.

On Friday, KPMG said that Boo's infrastructure had "a huge capacity", representing "a real point of interest for potential buyers". However, a report in yesterday’s The Observer (UK) suggested that Boo's distribution system is in fact subcontracted to Deutsche Post in Europe and United Parcel Service in the United States - and that Boo owes both firms more than $25m. If true, this undermines KPMG’s infrastructure claim, leaving the company with assets amounting to a fast-declining staff, surplus stock, and an over-elaborate, slowloading website.

News source: BBC Online Business News (UK)