The collapse of online sportswear retailer Boo.com marks Europe's first major dot.com failure, but it won't be the last as reality replaces hype in the Internet sector, analysts said yesterday.

"The days of funding dubious business propositions are over; there will be more failures," said Mr Peter Bradshaw, Net analyst at Merrill Lynch in London. "We estimate 75 per cent of European dot.coms will disappear either through consolidation or failure over the next few years."

Boo.com, launched last November, finally gave up the ghost and called in liquidators after its backers refused to support a $30 million (€34 million) structuring plan.

The closure of the unlisted etailer, which was burning through some $1 million a week, is expected to lead to some 300 job losses, mostly in the UK.

Analysts said its problems highlighted the precarious cash position of some dot.coms, particularly in the business-to-consumer (B2C) sector.

PricewaterhouseCoopers said in a report this week that the majority of British Internet companies could run out of cash within 15 months and a quarter of them within six months.

"Many of these companies have very little time left in which to start increasing revenues or to raise new cash, and there has been a recent correction in the equity markets, with investors becoming much more selective about which Internet stocks they will back," PwC partner Mr John Soden said in a report this week.

Share dealers agreed, warning that Boo.com's collapse would scare off many investors, underscoring an exit from the sector which has already seen a major correction in many Internet stocks this year.

Venture capitalists insisted there was still great potential for new companies to exploit the Internet but said a realistic business plan and strong management would be crucial in future.

"I wouldn't say there is a liquidity crisis within the venture capital industry. I think start-ups and middle-stage companies that have got good product and long-term potential will continue to be supported," Mr Brian Larcombe, chief executive of Britain's leading venture capital firm, 3i Group said.

Industry experts said Boo.com's ambitious plans to take on bricks-and-mortar stores showed the tough fight that B2C operators faced as "old economy" firms started to gear up their own Web presence.