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LOS ANGELES-Webvan Group Inc., the online grocer that some experts said only a year ago would drastically lower demand for traditional supermarket space, shut down its operations today and announced plans to file for Chapter 11 bankruptcy protection.

The company, which raised about $800 million from venture capitalists since its inception roughly two years ago, had recently abandoned several markets in an effort to conserve cash. Before today’s announcement, it was focusing on about 750,000 active customers who ordered home-delivered items online in seven areas: LA, Orange County, San Diego, San Francisco, Seattle, Chicago and Portland, OR.

The company started out by taking electronic orders for groceries, but quickly expanded into delivering everything from household goods to compact discs and books. It told the SEC in April that it would need a large cash infusion in order to stay in business, and its own outside auditor attached a note to the company’s 2000 financial results that said there was “substantial doubt about Webvan’s ability to continue.”

The major cash infusion that the company was hoping for never arrived. Though venture capital in general has become harder for young firms to get, Webvan’s efforts to raise more money were further hampered by the fact that it lost $144.6 million in 1999 and a staggering $453.3 million last year.

“In light of the tough climate for raising new funds and (a sharp drop in) our second-quarter order volume, we have made the difficult decision to end all operations effective immediately and to wind down the company’s operations and sell our assets in an orderly manner,” Webvan CEO Robert Swan says in a statement released today.

The company plans to file for bankruptcy within the next two weeks, adds Webvan spokesman Bud Grebey. Virtually all of the company’s remaining 2,000 workers were let go this morning, most of them at the company’s corporate headquarters in Foster City, CA or at warehouses scattered across the West Coast.

Webvan’s stock peaked at $34 a share shortly after it went public in November 1999. It was selling for about 6 cents a share this morning, before Nasdaq officials halted trading in the stock.

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