IP: 6 to 8 percent of Internet startups have folded?

[David Farber <dave () farber net>]

> 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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