Yes TV decision clouds dotcoms

By THIS IS MONEY
Updated:

 

Pressure on tech stocks will intensify following video company Yes TV's decision to pull today's £560m flotation. Coming so soon after boo.com's collapse with debts of £17m, it is a body blow to a market now bracing itself for the next dotcom disaster.

E-business consultancy E-INSIGHT warns that most dotcom start-ups have wasted venture capital funding on ineffective marketing and elaborate technology. After evaluating about 300 start-ups in the UK and Europe, it has found that the average annual operating loss across the dotcoms with funding will be at 76% of sales, compared with a 30% loss on sales within the unfunded start-ups. E-INSIGHT's chief executive Alan Taylor predicts a big management shake-out in both the venture capitalists and the dotcoms which they have backed.

Meanwhile, boo.com liquidator KPMG said that several of the 42 prospective buyers initially interested in the company had paid refundable deposits of £1m for a place on the list of serious contenders. The business faces closure on Wednesday if it is unable to strike a deal.

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