Queercompany, the UK-based gay and lesbian Internet portal has ceased trading and put itself up for sale on Monday after burning through its £3.5m (US$4.9m) of start-up funding, reports The Financial Times.

The company, which is the latest Internet start-up to succumb to the harsh realities of making money on the web, has also laid off most of its 28 staff.

The website was launched in November 2000 after securing the funds from Smedvig Capital Ltd, a venture capitalist at the beginning of April 2000, the highest level of funding yet achieved by any gay and lesbian company in Europe.

However, Smedvig Capital is understood to be reluctant to continue to fund the business with no sign of advertising improving.

Fable magazine which also targeted at high-earning professional gays and lesbians ans has since published two issues, was launched late last year in a bid to boost dwindling advertising income.

Wanda Goldwag, chief operating officer, told the paper: "We created two pretty well-known brands, but we did not get anything like the advertising revenues we expected.

"We launched a dotcom concept [in late 2000] which has proved problematic and we then launched the magazine in the worst advertising recession of my lifetime."

The website is possibly best remembered for its billboard advertising campaign which showed two women in their underwear kissing; and was soon investigated by the Advertising Standards Authority after a flood of complaints from family groups.

The company also launched the Queer Card, a credit card aimed at gay shoppers wishing to "make a personal statement".

A spokesman revealed that the company has had "a couple of enquiries" from potential new backers but did not provide more details.