CMGI denies reports VC arm out of money

The incubator company refutes a claim that venture capital operation @Ventures is out of money and will discontinue funding companies.

Dawn Kawamoto Former Staff writer, CNET News
Dawn Kawamoto covered enterprise security and financial news relating to technology for CNET News.
Dawn Kawamoto
2 min read
Incubator company CMGI denied a report Friday that its venture capital operation was out of money and would discontinue funding companies.

The report in the San Jose Mercury News on Friday said CMGI's @Ventures was out of money and was unable to fund its portfolio companies, citing "dozens of people who have worked with the firm."

"The story is not accurate," CMGI spokesman Bill White said Friday. "We are still committed to the @Ventures fund. We said months ago that there were going to be changes, scaling back in some areas, but @Ventures is still funding companies."

David Satterfield, business editor at the Mercury News, said Friday afternoon that the paper stood by the story, adding that they spoke to CMGI executives Friday after being unable to get comments earlier.

"They said their release was not in response to our report but that their board today has decided to reaffirm commitment," Satterfield said. He said they planned to update the online version of the story with CMGI comments.

CMGI spokeswoman Deirdre Moore, who also said @Ventures still had cash, noted that @Ventures had participated in a round of funding for Vaultus, a business-to-business wireless company, on Monday. She said @Ventures will continue to make investments in selected successful companies in its portfolio in addition to new companies.

Mondera.com, an @Ventures-backed jewelry e-tailer, said it had not heard of the incubator company cutting off funding to its portfolio companies. Fred Mouawad, Mondera chairman, said @Ventures provided his company with a bridge loan last summer, and the e-tailer has enough cash to last until the end of the year.

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Speculation of a cash problem at @Ventures may have arisen from the West Coast operations and changes CMGI has instituted at @Ventures, Moore said.

Shares of CMGI were down 28 cents, or about 6.5 percent, in late trading to $4.03.

@Ventures parent, CMGI, has encountered tough times. A number of companies in its portfolio have taken a beating with the market's slide and as funding has tightened throughout the capital markets. CMGI also saw its shares take a 17 percent hit in January, after announcing its earnings and revenues would likely fall below estimates for the current year.

The company has been on a rampant cost-cutting binge since the fall, as advertising revenues have dramatically dropped and hurt the financial performance of a number of companies in its stable. Some of those companies include AltaVista, Engage and Critical Path. CMGI has dramatically cut jobs, sold stock, and closed some of the companies in its portfolio.

News.com's Troy Wolverton and Greg Sandoval contributed to this report.