There isn’t much light at the end of the tunnel for dotcom companies struggling to survice in today’s brutal market place.
Webmergers.com, a US-based research company, says that 55 dotcom companies threw in the towel in April alone, taking the total of internet failures to at least 435 since the company started tracking dotcom insolvencies in January 2000. In April 2000, just one internet business decided to shut down.
In February of this year, 58 dotcoms called in the receivers. After a mere 44 companies had followed suit in March, it seemed possible that conditions in the internet sector would become more benign going forward. April’s figures come as a setback.
Those hoping that the sector will soon have seen the worst will be further disheartened by the fact that almost half of all shutdowns (211) counted by Webmergers have occurred over the past four months. Among the failed businesses are internet access providers and consultancies, i.e. businesses which previously seemed better positioned to weather the storm than straightforward e-commerce plays.
M&A activity in the sector is also falling rapidly. Last month, $2.6bn were spent on 115 internet companies in April, down from $5bn and 143 deals in March.