[03/24 UPDATE: The Boston Globe has reported today that Karmaloop has filed for Chapter 11 bankruptcy, with the company listing $10 million to $50 million in assets and $100 million to $500 million in liabilities. The company owes Insight Venture Partners of New York $8 million and nearly $1 million to Google Inc., among Karmaloop’s biggest creditors. Selkoe has said that Karmaloop will continue to operate.]
It’s been reported that Karmaloop is mulling bankruptcy. The iconic streetwear company that helped act as a launching pad for many streetwear brands is now seeking additional funding and its future depends on whether it receives it. According to the NY Post:
Still, those talks could fall apart, insiders said, leaving Karmaloop’s investors liable for as much as $100 million in writedowns on debt and equity. Those investors include the prominent New York VC fund Insight Venture Partners, which has poured about $50 million in unsecured loans and equity into Karmaloop, insiders said. Reps for Insight and Karmaloop declined to comment.
There have been numerous complaints on Karmaloop’s Facebook site, complaining about late shipments, as well as talk that vendors are not being paid. Recently company GEO Greg Selkoe has let social media followers know that issues related to shipping are temporary and will be taken care of.
Founded in 2000, Karmaloop was among the first to sell clothing online in a big way, but began to face much greater competition over the past several years as more retailers and etailers entered the online space. And as streetwear became more mainstream, Karmaloop had to compete with retailers like PacSun and Zoomiez plus the brands themselves, many of which invested in growing direct-to-consumer sales. It also suffered setbacks when entities like MissKl and Karmaloop TV didn’t take off as anticipated and ate into company profits. The company has attempted to improve ordering and shipping efficiencies by partnering with sites like Ebay and has also streamlined staff through company layoffs over the past few years.
Talk has circulated that Damon Dash and Kanye West plan to purchase the site, a rumor that arose after an interview (below, Karmaloop talk starts at 16:20) in which Dash says he and West will buy the site and put Complex out of business. West has not commented on investing in or purchasing Karmaloop.