Finnish startup Fruugo fascinates me to no end.
Founded in late 2006, the company set out to build a massive pan-European social e-commerce service, which it finally launched in closed beta at the beginning of this year. Their mission statement? To make Fruugo the equivalent of Google in search when it comes to social commerce on the Web.
The company reportedly raised dozens of millions of euros, at one point flirted with an employee headcount of 150 to 160 people (including contractors) and boasted a rock star board of directors that included people like former Nokia CEO and current Chairman of Shell Jorma Ollila as well as F-Secure Founder/Chairman Risto Siilasmaa. In 2008, they burned through about 14.5 million euros before they even put the closed beta product live and were ultimately forced to lay off almost half of its workforce as a result.
Now this article – note that it’s in Finnish and trust me, the Google-translated version wouldn’t help you make sense of it either if you don’t speak that language – claims an amount ‘south of €1 million’ was put into the company as a bridge investment. The round was extended to all existing shareholders, including the two directors mentioned above as well as media group Sanoma and Seppo Sairanen (the previous majority owner of financial group FIM). Also according to the piece, the company now employs approximately 25 to 30 people, a far cry from the more than one hundred full-time employees it boasted two years ago.
The extra funding is seemingly merely an intermediate step to keep the company up and running before more money is raised from institutional investors in the near future. Fruugo CEO Juha Usva recently told press that the company’s financial situation was ‘tight’ and that they were having more trouble finding capital because of the recession than anticipated.
This is what Usva just informed me by e-mail:
“Fruugo recently arranged a share issue, directed to existing shareholders. With this we raised sufficient funding to continue working on some other arrangements, but in practise the fund raising continues. From business perspective, we have now moved to an active business mode, and are building the scope gradually (from category and geographical perspective). Things are moving to a good direction, and we are looking forward to successful remaining of the year and 2010.”
To be continued for sure, not in the least when the company actually starts rolling out the service to the rest of Europe. If they ever get around to it.