Dot-coms now closing at one a day
Published: 20 Nov 2000 11:50 GMT
Dot-com closures are accelerating, with Internet startups now closing at the rate of about one a day, according to a new report.
The figures bring clarity to the endless announcements of young companies shutting down -- some of which launched amid great fanfare only earlier this year. Across Europe and the US, 130 Internet companies have folded since the beginning of the year, with 21 in October alone. In November the rate of closures exceeded one a day, with 21 closures in the first half of the month alone, according to a study from Webmergers.com.
Webmergers estimates 8,000 jobs have been lost in the bloodbath, but other studies put the losses even higher. In October, 5,677 jobs were cut in the dot-com sector, up 18 percent from the 4,805 layoffs in September, according to a report from Challenger, Gray & Christmas.
Last week TheStreet.co.uk, the UK branch of US financial site TheStreet.com, abruptly shut down operations with two months of funding left, while the US site cut jobs and ended a joint newsroom with the New York Times.
Another recent victim is Ready2Shop.com, the women's shopping site launched a year ago by Telegraph columnists Susannah Constantine and Trinny Woodall. Ready2Shop laid off about half its staff over the summer and has now axed all but four staff. The site hopes to keep costs low enough to exist for another year on its original £5m of funding.
One in four of the failed sites tabulated by Webmergers were business-to-consumer companies, but 26 business-to-business sites were also hit. The largest proportion -- 35 percent -- were in California, but eight percent of the shuttered companies were in Europe.
Most of the companies are not being snapped up by better-established or more traditional competitors because they simply have no assets -- such as an audience base, a brand or proprietary technology -- worth buying, Webmergers found.
There could even be an element of sadism in the lack of acquisition interest from bricks-and-mortar companies, the study found. "It might be just more fun for bricks and mortar companies to watch these dot-coms die," one analyst told Webmergers.
Conventional wisdom from industry observers has it that the failure of dot-coms is just a superficial distraction from the real story of the growth of the Internet for businesses. That idea was borne out last week by findings that e-commerce spending by small to medium enterprises is set to boom dramatically over the next 12 months.
Over the next year, small and medium UK companies are to spend more than £3.8bn, topping the £3.24bn spent to date, according to a report by Durlacher Research.
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