INVESTMENT
Idealab trims its US staff
15-01-2001
by Aoidin Scully
Internet incubator Idealab has laid off 30 out of its 120 staff in Pasadena, California but has apparently spared a full closure of its New York offices.
A spokesperson for the six-year old privately-held investment company said laid-off employees would be transferred to the incubator's portfolio companies and explained its decision to trim its staff and operations as a response to current market conditions.
There were initial reports that Idealab had closed its London office, which employs 17 staff, but this was denied by its Chief Operating Officer, David Ishag, who said there had been no UK redundancies.
"It's very sad that they're having to effect the layoffs but it's just a function of economic reality and shouldn't affect us in London from an operational standpoint," said Ishag.
Idealab's London office has stakes in companies such as Scan, a mobile-commerce company, and Peoplelink, an on-line community site. It also bought the rights to the .tv suffix which was awarded to the South Pacific island of Tuvalu.
Before the market shift, the company was ripe with cash. Last March, Idealab announced it had raised USD1 billion in equity financing, from investors including its founder and Chairman Bill Gross among others.
However, in October, the company announced that it was postponing its initial public offering to focus on new company creation.
"Over the past several months, we have seen dramatic shifts in the market and determined that it is in the best interest of the company, its employees and investors that we not proceed with the offering during this volatile time," said Gross.
Idealab had a stake in Etoys, the stricken toy e-tailer which closed its European operations just after Christmas and sacked 700 US staff the following day.
Incubation operations in Ireland have not seen the same boom and bust cycle. HotOrigin, an accelerator of software and eCommerce companies, recently announced an investment of IEP2.5 million from AIB, an amount that should keep the company busy for the next 12 months, according to CEO David Dalton.
"One of the issues that a lot of venture companies are coming up against is that they invested at the peak of the market. A lot of these companies are restructuring their portfolios, and Idealab is not the first venture firm to lay off staff, " said Dalton.
He maintained that HotOrigin would not have to deal with the same problems.
"Firstly, we don't have the burden of a legacy portfolio and secondly, we're investing at a time when expectations are much more realistic," said Dalton.
Caped Koala Studios has built a virtual world for kids, combining education and social networking 