Internet Investment

By Oliver Goggi

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IT's BEEN called the 'Dotcom Death-watch' and the casualties list is still growing. The last quarter of 2000 saw internet companies collapsing at an average of one per day, but those hoping a New Year would revive the new economy might just have to hold on a bit longer.

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Four days into the New Year eToys had Bob the builder fronting its online retirement in the UK with a quizzical 'can we fix it Well, no we can't actually'. Couple of days later Letsbuyit.com proved that despite a $100 million ad budget and an army of animated ants - no one bought it. And the British arm of buy.com had a lucky escape with John Lewis throwing a life line early February with plans to step up its own online retail operations.

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So the big question for this year is where the smart money will invest. For a start it seems to be steering clear of the business to consumer models, focusing on wider segments of the market. And business expectations will also be generally more conservative.

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Dan Conaghan a director with New media spark commented on last year saying: 'there was a belief among start-ups that the time from the start to public flotation was a year to 18 months, now this has been put back to four to seven years.'���

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So just where are we going to see the VC interest this year Well, opinion is that the driving force behind investment will be those ventures utilising core technologies - one's that aren't being used by everyone else. Those start-ups likely to retain funding and continue business will be those that have built their business around a particular technology. However, the trick is identifying these new technologies and exploiting them, rather than reusing the old favourites such as sms, wap etc.

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It's going to be the companies with the secret technology up their sleeves and the ability to exploit it that look set to reach that elusive pot of gold.