Investors File Suit Against Idealab!

Internet incubator idealab! is in hot water once again.

A group of investors is suing the company, seeking to dissolve it and return the assets to shareholders. The suit comes hot on the heels of an idealab! offer to buy out investors for 10 cents of each dollar invested. Many shareholders have complained the price was too low, according to a recent Wall Street Journal article.

The investors, which include Dell Computer Corp., Moore Global Investments, T. Rowe Price Associates and Kline Hawkes & Co., charge that Bill Gross, who is idealab!’s founder and chief executive, and his fiancee, Marcia Goodstein, the company’s president, have generated mostly failed companies and have kept the incubator alive to finance their own lavish lifestyles.

The plaintiffs have collectively pumped about $1 billion into the company, the Journal article said.

In the suit, the investors allege that idealab! has approximately $500 million in cash and marketable securities; therefore, they should reap returns that are closer to 50 cents on each dollar they have invested.

Gross said idealab! would fight the suit, according to the Journal.

Robyn Kurdek can be contacted at:Robyn.Kurdek@tfn.com