Drkoop.com Gets Needed Infusion

Drkoop.com Inc., a health Web site co-founded by former U.S. Surgeon General C. Everett Koop, received a $20-million investment in exchange for control of the company as it was running out of cash. The investors, who include Prime Ventures, can convert the financing into a controlling stake and have the right to choose as many as four board directors. Three officials from Prime Ventures, which will chip in $3.5 million of the financing, have been named to top executive posts in the company. Drkoop.com and scores of other Internet-content companies have gone public in the last two years, betting on advertising to make them profitable. Like Drkoop.com, many have run through the cash raised in initial public offerings. Drkoop.com’s shares peaked at $45.75 on July 6, 1999. They have dropped 91% this year. They fell 27 cents to close at $1.08 on Nasdaq. The investor group also includes JF Shea Ventures, Cramer-Rosenthal-McGlynn Inc. and RMC Capital. The $20 million in equity financing is convertible into common stock at 35 cents a share. Koop will continue as chairman. The investors will try to shore up the Austin, Texas-based company, which said this week that it needs financing to continue operating.