netimperative.com bites the dust

UPDATE: Another dot com startup calls in the liquidators as speculation mounts as to who will be next

British Internet news service netimperative.com has gone into liquidation following an emergency board meeting Monday.

A statement from the company blames its collapse on ill-judged attempts to expand. "In making this announcement, the executive directors recognise that the decision to seek to expand the company rapidly in the last few months led to the current position," the statement reads.

The six-month-old site, operated by The Net Imperative Ltd., is based in London and has received funding from research firm Durlacher and Esouk.com.

netimperative.com was planned as the first in a series of international sites providing locally-relevant news and information.

Its collapse, coming only days after high-profile sportswear site boo.com called in the liquidators, is bound to add to the feeling that the Internet gold rush is over. A PricewaterhouseCoopers study fuelled such sentiment last week. It found that one of four startups are set to run out of cash within six months.

Similar findings in the US led to a broad selloff of the shares of all but the largest Net companies. Sites such as peapod.com and, more recently, Digital Entertainment Network found it impossible to raise the funds to keep going.

The Internet still has all its old promise, say experts -- it's just that small startups aren't necessarily in the best position to exploit that promise. "I don't think boo.com is a special case," said Nick Ward, head media analyst at Commerzbank. "There are many Internet startups which have been overhyped and have huge valuations, even now, on the basis of business plans that aren't that effective."

Financial analysts and investors are increasingly putting their money on large, traditional "bricks and mortar" companies with Internet strategies, on the more established "pure-play" startups such as Amazon.com, or on companies that focus on Internet infrastructure. "If I were looking to invest in dot coms in Europe, I'd be much keener to go for picks-and-shovels type businesses, selling infrastructure," Ward said. "There aren't that many examples of [business-to-consumer] companies in Europe you'd feel secure with."

The US has, of course, produced some of the biggest business-to-consumer Internet brands around: Yahoo! and Amazon.com are two examples. But the Internet revolution may have come to Europe too late for startups to get the jump on their bricks-and-mortar competitors, the way they did across the pond.

Lastminute.com, for example, has created a substantial business in the online travel sales market -- but it will shortly face competition from a portal created by British Airways and 10 other European airlines.

"The irony is that travel companies are a quintessential middleman business, and the whole thing of the Internet is cutting out the middleman," Ward said. "The portal created by the major airlines has a real chance of success."

A few weeks ago there was a flurry of commentary about the significance of the stock market crash(es) on the viability of emerging dot com business. It has now had a knock on effect on the real world, as increased suspicion about the future of the dot com has made investors less keen to part with their money. Read the news comment from Tony Westbrook at AnchorDesk UK.

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