Lucky Few Still Get Bucks

By eweek  |  Posted 2001-02-05

The wacky days of unlimited dot-com financing are over, but some Internet retailers and start-ups are — surprise — still attracting investors.

Take the case of, an online hospital maternity service, which just landed $4.9 million in funding led by Primedia and Toys R Us. The Web site allows parents to introduce their newborns to loved ones via live, full-motion video over the Internet., an online photography service in Emeryville, Calif., closed its $41 million second round of financing last week led by Index Ventures. The company offers digital image and film processing, among other services.

The Motley Fool also snagged $30 million in second-round financing late last month from AOL Time Warner Ventures, Maveron, Mayfield Fund, and Softbank Finance Group.

Some online retailers have also been able to find financing despite the difficult economy and the backlash against investing in online stores., an online retailer of baseballs, footballs, golf balls, soccer balls and so on finalized $13 million in new capital led by Zesiger Capital Group.

"Our ability to not only survive, but thrive in adverse market conditions, is proof that a sound business model based on financial fundamentals can win," said Jim Klein, JustBalls chief executive.

The, the largest online retailer of museum-related merchandise and gifts, received $8 million during its second round of venture capital funding by Mercantile Capital Partners, Northwood Ventures and TH Lee Putnam Internet Partners.

And late last year, completed a $25 million funding round, its fourth cash infusion and the last one needed, it says, to reach profitability. The online retailer says Primedia, publisher of American Baby and Seventeen magazines, led the round with a $7 million investment. The company has raised a total of $85 million since it was founded in 1998.

"We believe they have a unique marketing position with the retail category serving new and expectant mothers," said Bob Davidowitz, publisher of the American Baby Group division at Primedia.

Laurie McCartney, Estyles founder and CEO, said the company has raised money through the dot-com doldrums by having a business model that focuses on high-profit margins, limited advertising expense and a retail category that is fragmented.

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