Kozmo expects IPO to deliver $150 million

The online convenience store that promises goods in less than an hour files to raise $150 million in an initial public offering.

Greg Sandoval Former Staff writer
Greg Sandoval covers media and digital entertainment for CNET News. Based in New York, Sandoval is a former reporter for The Washington Post and the Los Angeles Times. E-mail Greg, or follow him on Twitter at @sandoCNET.
Greg Sandoval
2 min read
Kozmo.com, the online convenience store that promises to deliver goods in less than an hour, filed today to raise $150 million in an initial public offering.

New York City-based Kozmo sells entertainment, food and household products online and dispatches delivery people in vans, on bicycles and on motor scooters to carry the purchases to customers' doors.

The company did not specify in documents filed with the Securities and Exchange Commission the number of shares to be sold or at what price it intends to sell them. As previously reported, Kozmo chose Credit Suisse First Boston as its lead underwriter.

The IPO filing follows an announcement yesterday by Amazon.com that it invested $60 million in a private round of financing for Kozmo and signed a three-year agreement to ship some entertainment items to customers via Kozmo.

The public filing showed that Amazon owns a 31 percent stake in Kozmo, which intends to use the IPO proceeds to fund expansion to at least 10 new cities this year. Among the company's other investors are Chase Capital Partners, Oak Investments and Flatiron Partners.

Analysts have predicted Net retailers use same-day delivery to competethat Kozmo, which operates in six U.S. cities including New York, San Francisco and Los Angeles, will gain a foothold in the same-day delivery business. Amazon ships most of its goods through the U.S. Postal Service, an Amazon spokesman said yesterday.

Kozmo's SEC filing provided few surprises about the company, founded by co-chief executives Joseph Park, 28, and Yong Kang, 27.

Like so many other Internet companies, Kozmo is experiencing huge growth as its losses mount. The company is recording a 30 percent rise in new customers each month, but it has accumulated a $27 million deficit.

In a deal announced this month, Kozmo agreed to pay Starbucks about $150 million during the next five years for the right to offer the giant coffee merchant's products on its site.

As for its short-term prospects, Kozmo said in the public filing, "We expect that we will continue to incur substantial losses for the foreseeable future."

Kozmo filed to trade under the ticker symbol "KZMO."