Hyped-up Amazon-killer Jet is reportedly close to running out of cash
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An earlier report from Fortune indicated that Jet was raising a $500 million round led by Fidelity.
The Journal reports that Jet hasn't closed the round of funding, which could be as much as $550 million when it's finally complete. Fidelity is in talks to contribute a $90 million investment, leading the round.
And it sounds like Jet needs the new cash infusion.
The startup is bleeding money. Last month, Jet had $63 million in cash on hand according to financial documents reviewed by the Journal, which indicated that the company is expecting a $76 million cash drain in November and December, mostly due to marketing costs. (If you live in New York City, you've no doubt seen Jet's advertising plastered atop taxi cabs and inside of subway cars.) A spokesperson for Jet told the Journal that the company is planning to cut down on marketing during the holidays.
Fortune had previously reported that the new round of funding would bring Jet's pre-money valuation to $1 billion.
The Journal says that when it's all said and done, the new round of funding will bring Jet's post-money valuation to $1.55 billion. But when Jet started fundraising last month, it was seeking a $2 billion valuation, and earlier this year, the company had talked with investors about a $3 billion valuation, the Journal said.
Jet previously raised $225 million at a $600 million valuation to take on Amazon - the most equity funding ever raised in the first 12 months by a US commerce company.
Jet founder Marc Lore sold his first company, Quidsi, to Amazon for $540 million in 2010. Lore has been frank about the fact that Jet will need to raise a ton of money to achieve scale.
Jet hit over $1 million in sales on its first day after opening in July. It was the No. 4 marketplace in terms of sales just a month after launching, beating out Sears and Best Buy. The company promises to offer prices that are up to 15% lower than anywhere else on the web, and it developed an exclusive technology that adjusts prices in real time based on what users put in their carts.
But in October - less than three months after its launch - Jet changed its business model and dropped its $50 membership fee it once said would be its sole source of profit. The startup switched from its Costco-like model to instead try to make profit on each sale.
We've reached out to Jet for comment.