Dive Brief:
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Boston-based e-commerce company Karmaloop Monday filed for Chapter 11 bankruptcy protection and has received $3 million in "debtor in possession financing" from Comvest Partners to support a reorganization.
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The company plans to sell a majority stake in the business. Founder-CEO Greg Selkoe says there are several interested buyers, and Kanye West and Damon Dash of hip-hop’s Rock-A-Fella Records say they’re among them.
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The company began 15 years ago as an apparel and accessories curation site aimed at men 18 to 35 that offered a huge selection of hip-hop styles at low prices.
Dive Insight:
Karmaloop grew its operations and side projects quickly in the past few years, from women’s lines to television content. CEO and founder Greg Selkoe himself says things began to spin out of control a couple of years ago. Although it was never a flash-sales site per se, Selkoe says he saw how venture capital funding was flowing to sites like Rue La La and Net-A-Porter and said that helped keep his ambitions stoked.
For now, the company must get a handle on $40 million in bank debt in order to get back on track or be sold.
"In 2011 and 2012 there was a lot of frothiness and excitement in the e-commerce world," Selkoe told Boston Business Journal. "There wasn't a lot of focus on the bottom line, it was all on expansion and growth."