E-countries, a global publishing and online marketplace with an office in Dublin, will close within days after failing to complete a fund-raising round.

The company, which was co-founded by Dubliner Mr Donal Smith, failed to complete an investment round with its existing shareholder UK investment group 3i.

The British venture capital firm was lead investor in a recently completed $3 million (€3.21 million) funding round, which brought total investment in the firm to $10 million.

Other existing shareholders include Pie Capital and Elder Street. It is understood E-countries was also talking to potential Irish and US investors.

According to sources close to the situation, the firm was due to receive a cash injection of $1.5 million this week from 3i Group. However, funding has not been provided, leaving the firm with no money to pay its staff. A spokesman for 3i confirmed yesterday that the venture capitalist would not invest because of uncertain market conditions for Internet companies.

E-countries, which has offices in London, New York, Dublin and the Far East, suffered a high cash burn ratio - estimated at about $800,000 per month - according to the source. It is understood 3i Group finally pulled the plug because E-countries' revenues failed to match targets that were set at the last funding round in October/November.

In December, IDA Ireland allocated funding to the company from a special high-risk investment fund which uses less stringent evaluation criteria than normal grant assistance.

However, an IDA spokesman said yesterday no money had been drawn down from this funding by E-countries and, if the firm went out of business, it would not cost the Irish taxpayer any money.

Some 10 staff are employed by the firm at its Dublin office and 50 worldwide. Last night the company announced it would close within days.

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