According to a Finnish business periodical, Talouselämä, Fruugo has secured more financing from its current shareholders, Jorma Ollila, Risto Siilasmaa and others. We previously wrote about Fruugo laying off 40% of its staff to cut its burn rate. At the moment, 25-30 people work at Fruugo.
Juha Usva, Fruugo CEO, confirmed that they offered a round to their current share holders and they invested a little less than 1 million euros to the company to keep it afloat. According to Usva, this does not give them too much to rest on as they begin to search for new investments immediately.
With the current burn rate, my guess is that Fruugo has about 6 months to find new financing. Enough time to close those new deals for sure. Secondly, they have just stated that the current share holders are very determined to get the company succeed, which should at least marginally lower the risk of new investors coming aboard.
Fruugo has gone through a lot of difficulties recently and they’ve been much debated in the press and blogs alike. One of the issues that has caused a lot of debate is the fact that they burned through over 14 million euros last year and ran into troubles after that. Nevertheless, we do want to stay hopeful that they’ll find a way out as said before, it’s not just Fruugo that has a lot to lose – the whole Finnish startup ecosystem has its reputation on the table.
iWillStudy.com
Unita
I don’t think it’ll be a big blow if Fruugo fails. It’d be just another example proving that success can’t be bought. That’s great news for all cash-strapped entrepreneurs as it means skills and efficient execution are still the keys to success, not unlimited funding.
Hi,
I followed the Fruugo progress since the date it started. The failure of it can be estimated. One of the primary reasons is that I (as a user) don’t really get the idea of Fruugo. Second, even though there are a lot of talks about it but yet the site seems doesn’t get the user attraction. I visited Fruugo something, but don’t get to use it in the first sight.
Hardly to say about the future of Fruugo :(
To be honest, i don’t even consider Fruugo as a startup. No regular start-up spends 14M and barely get something launched (beta). But i agree on a few things:
-Success can’t be bought. I know there were tons finnish of consultants working with Fruugo. Expertise that Fruugo needed, can’t be found in Finland.
-It’s too complex. If you can’t explain people what Fruugo is for, they won’t use it.
-It’s hard to start an internet business in Finland. I’m still waiting for an success story about finnish web startups. Hopefully we see one soon, but it’s not going to be Fruugo. Problem: we love technology but we forget about content and other important factors that make internet business successful..
-Substance competence. I think the management didn’t know what they were doing when Fruugo was started. Start-up management really need to know inside-out the business they are jumping in to.
Anyway, I hope the very best for Fruugo. Hope they can still fix things :)
This may sound harsh, but I really hope they would just go bankrupt and get it over with.
This extra funding will only postpone the inevitable. The company has virtually no revenue, the business model is still broken, there are still almost no vendors/partners, marketing and PR is non-existent.
I wish the money men (Ollilla, Siilasmaa etc.) would use this investment money on companies that actually do have a sustainable business model and a chance. But now, I fear, all that money just goes to waste.
I don’t suppose there’s anything THAT exceptional or dramatic about Fruugo. EXCEPT the locale (which was supposed to be an advantage I guess).
Companies of this size, resources and ambition are born all the time and not just in Silicon Valley.
So the big bright idea has been ’spent’, bridge financing is in and the end game is on… They’re facing the final sales challenge: can they now sell the idea to a new set of investors? An exit at this stage would sound like a surprise.