Lehman Bros. backs myShape amid death rattle

Venture Beat — Mon, 06 Oct 2008 10:32:15 -0700

Only a few weeks before its demise, Lehman Brothers Holdings Inc. led a third round of funding for myShape, an online store that helps women find clothes that fit their exact dimensions. The company’s venture branch committed to the contribution in August before filing for bankruptcy in mid-September.

Seemingly unaffected by the Lehman fund’s collapse, the investment round remains open. So far, Pasadena, Calif.-based myShape has raised $12 million, and hopes to close above its target of $16.5 million. The money will go toward expanding and marketing the site, and bringing more clothing brands on board.

The next year will be key for the apparel site to keep an edge over its competition. Right now, myShape users enter their measurements into the website, and are then presented with clothing options that would fit and look best. Similar site Zafu Inc. uses an algorithm to suggest flattering clothing patterns for users’ body types, and several companies like Intellifit Corp. have developed body-scanning technologies that can produce custom-fitted clothing patterns.

Meanwhile, Lehman’s holdings company — the largest of its kind to file for bankruptcy — plans to reinvent itself as an independent firm if it can convince several limited partners or other firms to buy out Lehman Brothers’ interest in the fund. This could be difficult considering the mess that’s been left behind. Lehman Brothers’ creditors filed Thursday to investigate a suspected $17 billion in cash and securities it was holding at JPMorgan Chase & Co. In addition, Richard Fuld, the fund’s chief executive, testified before Congress today, admitting that it critically misjudged the mortgage markets and was unable to keep up once the problem gained momentum.

Previous myShape investors Draper Fisher Jurvetson, Pasadena Angels and Tech Coast Angels joined Lehman in the current round.

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Lehman Bros. backs myShape amid death rattle