When pets.com, the pet products retailer, turned up its toes last month, almost the only thing of value that remained was a toy dog called Sock Puppet that had served as the company's icon. It is as good an epitaph as any for the stock market bubble that will be remembered as the Internet mania.

The bursting of the bubble has destroyed billions of dollars' worth of value that momentarily resided in the super-inflated stock prices of Internet-related companies. But it is not just paper fortunes that have been lost. Vast amounts of hard cash have been transferred from those on the losing side of the game to the winners.

How much money was involved? Where did it go? And was the mania ever much more than an elaborate pyramid selling scheme that enriched the few at the expense of the many?

In the US, which accounts for most of the world's investment in dot.com companies, the bulk of the cash came from two main sources: venture capital and public stock offerings.

According to PricewaterhouseCoopers (PwC), venture capital investments in Internet-related companies rose from just $176 million (€205 million) in 1995 to $19.9 billion in 1999, reaching a total of $26.5 billion over the five years. Yet venture capital funds and their investors - mainly pension funds and wealthy individuals - are not among the big losers. Rather, they have watched their returns decline from the stratospheric to the merely large.

"Last year was an incredible aberration. It was not unusual to have venture capital with a 1,000 per cent internal rate of return 10 times your money," says Mr Robert Lessin, chairman and chief executive of Wit SoundView, a US boutique investment bank specialising in the technology sector.

"Obviously that's not the case right now but, even when the percentage of investments that are under water or liquidated is high, it's still a fairly good business because the returns from a single success can offset an entire portfolio of losses."

One reason for venture capital's high returns last year is that many funds invested just before an initial public offering and watched the value of their investment rise 400-500 per cent when the offering took place.

It was the IPOs and follow-on offerings that attracted the big money and the wider public. According to CommScan, a New York-based research service, IPOs by Internet-related companies raised $75.2 billion in the past five years to last month and follow-on offerings raised a further $51.6 billion.

If those figures are added to the $26.5 billion raised in venture capital, they total just over $150 billion.

However, some of the cash raised in public offerings never reached dot.coms. According to CommScan, $5.3 billion of it paid the fees of Wall Street investment banks, which repaid their clients by driving up stock prices with bullish circulars on the internet sector.

Further, although most of the money raised in IPOs went to dot.coms, a high proportion of the money raised in secondary offerings $22.6 billion, according to CommScan went to investors selling shares. These included dot.com entrepreneurs joining the multi-millionaire club as well as venture capitalists taking investment profits.

Of the money that reached the companies, a high proportion in some cases, up to 80 per cent was spent on advertising to attract an audience and build an enduring brand. The biggest spenders on marketing were business-to- consumer companies, particularly e-tailers.

According to Pegasus Research International, a New York Internet research firm, Pets.com spent $103 million on sales and marketing during its short life $179 for every customer it acquired.

Of the rest of the money, some was used to pay wages, rent and the usual costs of doing business. But another big drain was the practice of selling goods and services at a loss.

The main beneficiaries from this activity were the people who found themselves buying $1 bills for 50 cents apiece - in other words, the customers.

A recent study by McKinsey, the management consultants, found that, even ignoring marketing costs, most e-tailers were losing money on every transaction. In last year's fourth quarter, for example, Etoys, the online toy store, lost $4.04 on every order; Webvan, the online grocer, lost $12.90; and Drugstore.com lost $16.42 on every order for non-prescription goods.

"Consumers were getting a tremendous benefit in terms of both the product discount and the shipping discount," says Ms Joanna Barsh, a McKinsey director in New York.

So dot.com millionaires, venture capitalists, investment banks, the advertising and media industries and anyone who shopped online all participated in the $150 billion bonanza. Others who benefited included headhunters who helped staff the dot.coms, the public relations companies that hyped them and the consultants that jumped on the Internet bandwagon, such as Gartner Group, Forrester Research and Jupiter Communications (now Jupiter Media Metrix).

And the losers? In short, anyone who acquired shares in the now ailing dot.coms and failed to sell them before the crunch came. "That includes many young, first-time investors, especially those who were caught up in the day-trading mania that peaked last winter," says Robert Gordon, professor of economics at Northwestern University. "Many of them may have substantial losses in wealth that will have a negative effect on consumption as the next year works itself out."

Mutual funds, pension funds and other institutional investors were also badly hit. So were corporate investors such as Starbucks, the coffee house chain, which has just announced that its fiscal fourth-quarter profits were all but wiped out by losses of $58.8 million on its Internet investments.

Why is there so little resentment over the fortunes lost? Perhaps because of a sense that, unlike a pyramid selling scheme or tulip mania, the speculative excess led to the creation of real value in the form of a new industry sector that promises important social benefits.

Josh Lerner, professor of business administration at Harvard Business School, draws an analogy with the development of the electricity industry in the 1890s, when hundreds of companies sprang up with ideas for exploiting the technology and raised money on the public markets.

"Many of these companies went for models that proved to be unsuccessful," says Prof Lerner. "But even for projects that turned out to be classed as failures, there still could be a substantial social return because they led to a greater understanding of what business models did and did not work."

Investors who lost their shirts may also need to examine their consciences. As Mr John Whiting, a tax partner in PwC's London office, points out: "There are some very sad stories of people who lost more than they could afford. But one could turn round and ask them why they went into it and the answer is because they thought they were going to make a great deal of money."

Edward Wolff, professor of economics at New York University, says there is another explanation for the lack of hard feelings, at least in the US. "It's the myth that anyone can become rich that acts as the safety valve here," he says.

"It's not that everyone has done well. It's just that everyone believes the next $1 million is just around the corner."