[Prague, CZECH REPUBLIC] Globopolis.com, once one of the most promising Internet startups in the Eastern Europe, is going out of business after investor's decision to cut off the financing of the operations.

Globopolis.com was established in December 1999 as the city-search Web site for Central and Eastern Europe. Based in Prague, Czech Republic, with branch offices in Budapest, Hungary, Vienna, Austria and Warsaw, Poland, it offered coverage of sights, events, contains travel and accommodation information, reviews of clubs, restaurants and cafis.

Globopolis.com received substantial funding from the U.S. venture capital fund Advent International in June 2000. Total amount of US$ 6 million has been promised.

According to sources close to the company, about one half of this sum has been actually transferred and spent - without any measurable output. Globopolis.com with its 90 employees just burned the money in the speed of US$ 0.5 million per month. Advent decided to disrupt the financing surprisingly early.

Nevertheless, not all is that bad. Globopolis.com isn't going to file for bankruptcy; it is able to satisfy all its obligations. "For such a short period of time to build a base of 30 business development partnerships, 50 paying advertising clients and experience 400+ percent traffic growth is quite an achievement for such a young company. We are proud of what we have accomplished in this region," said Chip Schenck, one of the founders of the company.

Local Internet entrepreneurs unanimously say that the failure of Globopolis.com is the worst possible message about Czech Internet market. The company, established by Americans living in Prague, has been a role model for local dot-coms: quick start, successful funding, comprehensive plans. There is common concern that American investors may be more suspicious about Prague - and perhaps the Eastern Europe generally - after this fall.

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