On Monday Fruugo, a Finnish startup that in 2008 burned through € 14.5 million, laid off roughly 20 of their 50 employees, which equals to 40% of their whole work force. Fruugo CEO, Juha Usva, confirmed the news to me yesterday evening.
When I asked how much money Fruugo still has in the bank and how long will it last, Usva emphasized that 'the situation is tight'. According to some this means that Fruugo won't have enough money to pay their employees' monthly salary due on the 15th. Whether that's true or not, the financial situation of the company is clearly critical.
Usva also confirmed that Fruugo is still running 100% on risk capital as can be guessed. The company has a few thousand daily visitors visiting their site and out of the 200 retailers which they have so far secured, they have integrated 70 or so. The company is currently focusing firmly on Health and Beauty products to build a compelling product portfolio one niche market at a time. This approach is different from before where they had products all over the place. The Health and Beauty category has seen some healthy demand and the company has even started to market itself slowly through banner advertising and Google AdWords, although only in Finland. Most of Fruugo's users still come from Finland, but large chunk of the most popular stores are in the UK. Especially Myfaveshop (UK) that has partnered with Fruugo has turned out to be very popular among Fruugo customers.
We hope Fruugo can hold the line and get the badly needed next round of funding. It would be a loss for Internet entrepreneurship in the whole region to see such a big dream go unrealized. With Fruugo, just as with Igglo, a late Finnish real estate broker startup, it takes a whole lot of courage, vision and leadership to take a big idea to market. But as with all the big dreams, the risk is proportional to the upside.
We all have the same amount of time in a day but only a few brave ones decide to spend it on creating something really big that matters. This is because one needs to commit all she has, endure a lot of pain in the process and still have the odds against her. That's what Fruugo is doing and that's also what Spotify is doing. In both cases I would hate to see the I-told-you-so folks get the last word. The local entrepreneurial culture has most to loose. But also most to win.