Advantage Group will not be pulling back from its investment in FlyingPig despite the e-tailer letting around 20 staff go last week.
"We're 100% committed to FlyingPig, both as a partner and an investor," says Advantage CEO Greg Cross.
FlyingPig laid off about a third of its staff in what it says is a move to steady the ship. Twenty staff were made redundant last Monday, after employees were warned the previous Friday that jobs cuts were likely.
FlyingPig executive chairman Stefan Preston says the layoffs have been on the cards since the collapse of FlyingPig's planned merger with Australian e-tailer TheSpot.com.au last week, after a failure to agree on terms.
"Also, since April we've gone into an environment where the cost of fresh capital is much, much higher than it was before, and in that environment it makes sense to be much more conservative about the pace of growth," says Preston
"If we burn up too much capital growing too fast ahead of the development in the market, then we won't own the business any more."
One of those laid off says staff relations at FlyingPig had been very good and employees had been given the impression that the company had the capital to pursue plans for growth as required. The staff member says the change in environment at the company was very sudden and it appeared that "somebody has got nervous and stopped writing cheques".
But IDC Research's Internet specialist, Pat Pilcher, says this is nothing to be concerned about. "This is just hiccups and turbulence in the wake of the shift to Internet trading - it was bound to happen."
Jobs cut include those related to new product categories FlyingPig was developing for launch, but which have now been cancelled or delayed. Preston says new, automated systems have also reduced staffing requirements.