Internet recruiter Stepstone joins the dot.com casualty list

The collapse of the dot.com boom claimed another victim yesterday when Stepstone, the online recruitment company, announced it was cutting more than 500 jobs and warned that if it could not secure fresh funding it would be "unable to continue trading as a going concern".

The collapse of the dot.com boom claimed another victim yesterday when Stepstone, the online recruitment company, announced it was cutting more than 500 jobs and warned that if it could not secure fresh funding it would be "unable to continue trading as a going concern".

Haemorrhaging cash, the business is looking to raise about 25m to 35m euros (£15m to £20m) from new and existing investors. Without the cash lifeline the business could collapse altogether by the end of the year.

The UK business has been put into liquidation with the loss of 135 jobs. Stepstone is cutting its staff numbers to fewer than 350 from the current 876. Its office in London will close as the struggling group concentrates on its better performing markets of Germany, Belgium and Denmark. Staff at the London offices in Hammersmith were drowning their sorrows in local pubs yesterday afternoon. "It's very sad. A lot of them are very young," a spokesman said.

Advisers have been appointed to oversee the fundraising and the terms will be set out in an emergency general meeting notice in the next few days.

Like other high profile dot.com launches such as the collapsed boo.com, Stepstone was rapidly rolled out to 17 markets across Europe.

A year ago it employed an astonishing 1,400 staff. In the past year the number of CVs on its database has risen by 50 per cent to 453,000. But the number of vacancies has halved to 72,000. The business has continued to make heavy losses and third-quarter figures out yesterday showed losses of 28m euros in the three months to 30 September, down from 42m euros in the same period last year. Net cash balances have shrunk to 22.5m euros from 46.8m euros in the previous quarter.

Jonathan Turpin, chief executive of fish4.co.uk, a rival online classified advertising business jointly owned by local newspaper groups such as Trinity Mirror and Newsquest, said: "They overstretched themselves and as a pure play they had large overheads. As a pure play they started with no brand, no jobs and no infrastructure."

Launched in 1996, Stepstone was floated on the Oslo stock exchange at the height of the internet boom in March 2000 when it was valued at £530m.

As well as Germany, Belgium and Denmark it will also keep its trading operations in Norway, Sweden, Finland, Netherlands and Luxembourg. The business remains headquartered in Norway.

Stepstone has appointed Colin Tenwick, formerly of Red Hat Europe, as chief executive to replace Karen Slatford. She took over as interim chief in June after the resignation of Giles Clarke, the entrepreneur who made his fortune via the Majestic Wine Warehouse and Pet City retail concepts.

Stepstone's group revenues for the third quarter declined to 13.4m euros from 17.1m euros in the previous quarter.

BDO Stoy Hayward have been appointed liquidators to the UK business.