Venture capital firm slashes staff by 42 percent

The dot-com die-off is reaching venture capital firms, with a wave of layoffs hitting Divine InterVentures.

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
The dot-com die-off is reaching venture capital firms, with a wave of layoffs hitting Divine InterVentures on Monday.

The company laid off 18 of its 41 employees, mostly in the Partner Development Group, responsible for servicing the start-ups Divine has backed as well as finding new ventures to invest in, spokeswoman Judy Feinberg said.

Since last spring's market downturn, investors have moved their money away from e-commerce plays, leading many start-ups to run out of cash. For the venture capital companies that fueled much of the Internet boom by supporting a vast array of start-up ideas, the general downturn was bound to affect them as well.

Such highfliers as CMGI, Kleiner Perkins Caufield & Byers, and Benchmark Capital all have struggling companies in their portfolios.

CMGI-backed Furniture.com announced Monday that it has ceased operations. Kleiner Perkins last month saw Kibu, a teen site it invested in earlier this year, shutter its site. Around the same time, Benchmark-backed GreatEntertaining.com, a party-planning site, reduced its staff by two-thirds.

Primarily a backer of business-to-business start-ups, Divine InterVentures also has seen its share of setbacks in the down market. A week ago, Beautyjungle.com, an online beauty site that Divine owns a stake in, laid off almost 60 percent of its staff. In September, Divine's president and chief operating officer both resigned.

The company had planned to go public last spring, precisely the time the market began to turn sour on tech stocks. Divine was forced to postpone its initial public offering three times. After cutting its share price 40 percent to $9, the company finally made it out in July but raised only about $128 million of the $214 million it had projected.