Once a poster boy of the Estonian IT-sector, the Estonian-founded “virtual fitting room” service provider, has received 7 million euros in investments, including 200,000 from the state, to keep afloat.
New CEO James Gambrell said the company was devalued, and the injection will be used to cover losses, Äripäev reported Friday.
SmartCap, a part of the Estonian Development Fund, which oversees the 1.4-million euro state participation in Fits.me, said they took part in the new round of investments to protect their previous 1.2 million they have invested, and new CEO should be given time to lead the company.
Speaking about the fact that the company is yet to turn a profit, after many years of operation, Andrus Oks of SmartCap said that investors usually sell up or exit before profits as a IT company's value depends on its strategic position. “Not one Estonian IT company exit has happened from positive revenue position.”
He said if SmartCap, and thus the state, loses its investment in Fits.me, the profit made from the sale of GrabCAD will easily cover the losses.
Launched in 2010, the company offers retailers robot technology that can adjust to physical measurements, so customers can "try on" clothes online.
Fits.me has contracts with a number of clothing manufacturers, and had previously collected 6 million euros from investors.