Large numbers of Internet companies are failing despite the dramatic increase in venture capital investment in the sector, Dr Chris Horn, founder and chief executive of Iona Technologies, has warned.
Addressing the Leinster Society of Chartered Accountants yesterday, Dr Horn said the number of start-up ventures seeking Nasdaq listings within less than a year raised questions about the state of their health.
"This is quite amazing given the amount of due diligence that needs to be done before taking a public listing. In the last six months, Wall Street has lost interest in `dot com' companies aimed at consumer purchasing, along the lines of Amazon.com," Dr Horn said.
He said the focus had now shifted to business-to-business Internet companies specialising in cutting out the middleman from supply chain transactions. However, Dr Horn pointed out the Internet model wasn't suited to every enterprise and in some cases it was impossible to operate a "just-in-time" service where goods could be manufactured to order.
He added that the old business rules could still be applied to Internet companies, and cited as an example Amazon.com's pre-Christmas experience with inaccurately predicting consumer demand for its books online.
Dr Horn concluded that the recent experience of high-profile Internet sites being immobilised by hackers sounded a strong warning for businesses establishing an Internet presence.
