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IP: 6 to 8 percent of Internet startups have folded?
From: David Farber <dave () farber net>
Date: Wed, 01 Aug 2001 18:13:29 -0400
X-Sender: ari () mail olteco com Date: Wed, 1 Aug 2001 14:31:52 -0700 To: dave () farber net From: Ari Ollikainen <Ari () olteco com> Subject: 6 to 8 percent of Internet startups have folded? The numbers in this article are interesting considering the way the "dot-bomb" turndown is being played in the press at large. However, I suspect more shutdowns are in the offing given that many marginal Silicon Valley companies, both pre and post IPO, have downsized to cut down on burnrate...generally buying some time before spinning through the various bankruptcy flavors. Announcements of staff reductions are daily events in our neighborhood. Study finds sharp drop in Internet shutdowns in July http://www.siliconvalley.com/docs/news/svfront/053778.htm SAN FRANCISCO, (Reuters) - The number of Internet companies shutting down dropped sharply in July from June, reaching the lowest level since September, suggesting that a shake-out in the sector may be nearing its end, a report issued Wednesday said. The monthly report by San Francisco-based Webmergers.com said that 32 Internet-sector companies -- the highest profile of which was online grocer Webvan Group Inc. -- closed their doors in July, down from 58 in June. The report by the online hub for buyers and sellers of Internet companies called the drop ``fairly dramatic.'' Taken with recent reports showing a decline in layoffs at Internet-related companies, the numbers suggest that the rate of shutdowns likely has plateaued, the report said. According to the Webmergers.com July report, at least 592 Internet companies have folded since January 2000, with 367 recorded in the first seven months of 2001. ``We have seen the worst of the Internet shakeout,'' Tim Miller, president of Webmergers.com, told Reuters. ``Our data suggests that the tail-end of the business-to-consumer shakeout is overlapping with the early- to middle-stages of the shakeout in such business-to-business sectors as infrastructure and professional services.'' ``That overlap caused a substantial bubble in shutdowns early this year,'' Miller said. ``As the B2C casualty rate slows, we should see a gradual decline in total shutdowns. However, there may be a modest seasonal effect and we believe we could see a small spike in shutdowns and other Internet activity after the summer holidays.'' Miller noted that of an estimated 7,000 to 10,000 Internet companies backed by venture capitalists, angel investors or other investors, 6 percent to 8 percent have folded based on shutdowns he has counted.
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- IP: 6 to 8 percent of Internet startups have folded? David Farber (Aug 01)