More Dot-Com Carnage
By Randy Whitestone
Thursday, March 22, 2001; Page E08
SAN FRANCISCO -- Dot-com companies are still failing at the rate of about a dozen a week, with 106 closing in the first two months of 2001 as they ran out of money, according to the research and advisory firm Webmergers.com.
Since the start of November, 203 start-ups have closed as they spent the last of the money they raised a year ago, before public and private investors began to turn away from Internet and technology stocks. Recent shutdowns include the marketing site AllAdvantage.com and the Internet access provider ConnectSouth.
"February's shutdowns represented well over $1.5 billion in investment," Webmergers.com said in a news release. "Many of the shuttered properties are actively seeking to sell their assets or to reorganize through bankruptcy filings."
Loudcloud Inc., a consulting firm that last week completed the first Internet initial public offering in months, has dropped below its offering price, indicating weak demand for new stock sales. Venture capital firms are also a diminishing source of cash, with investments declining 18 percent in the fourth quarter, the third straight quarterly decline.
Selling the company remains another means of survival, said Webmergers.com, with 57 transactions worth $945 million in February, including Vivendi Universal SA's $140 million purchase of the online game site Uproar Inc., and American Express Co.'s $108 million purchase of SierraCities.com Inc., an online equipment finance firm.
That's down considerably from February 2000, when 89 such transactions totaled $20 billion.
Webmergers' data is limited to substantial Internet companies, which it defines as those that have received formal outside funding from venture capitalists or other investors.
© 2001 The Washington Post Company