Britain's venture capital industry has struggled to keep pace with the internet revolution. Start-ups with big ideas claim leading investors have kept true to their conservative image, unlike the United States, where venture capital firms are pouring money into e-businesses.
But, with more than $10bn (£6bn) of investment funds at stake, British private equity firms have been reviewing their investment strategies.
Ronald Cohen, founding partner of Apax, considers that at least half of his firm's $4.5bn in European/Israeli investment funds are backing internet-related companies.
"The net is revolutionising everything with well over half of our portfolio being net-related and probably a quarter dependent on the existence of the net alone," he said.
Apax has been on top of the technology sector since 1981, but concedes that the industry has been doing quite a bit of catching up in the e-commerce world over the past 12 months. He said at least a third of Apax's 130 staff focus on the technology and telecoms sector.
Other firms have been setting up specific funds to look at these sectors and splashing about huge remuneration packages to attract expert staff in an area where there are enormous shortages.
Martin Gagen, chief executive of 3i's American arm, said: "The venture capital industry is changing a lot faster because of the internet. Internet investing has affected business models and people have underestimated the effect this has had on the globalisation of the venture capital industry."
At least 30% of the $1bn-plus a year invested by 3i is in the internet, Mr Gagen said.
Executives in the private equity industry agree the emergence of cash-hungry and loss-making start-up internet companies has forced a rethink and change in attitude of traditional venture capitalist investment criteria.
The same model by which an engineering or hotel firm is assessed cannot be applied to internet and technology firms which might rack up losses for five years or more before, or if ever, a profit is achieved.
"You have to really appreciate the future opportunities of these firms as the historic precedent of profit flows on which you may have backed a company don't exist. So you have to look for milestones that have been achieved and judge them on that," said Mr Gagen.
The recurring theme that venture capitalists speak of when investing in these new-age companies is management, particularly given that the age of some executives in these businesses can be as young as 15.
Ian Oxley, investment manager for European internet investments at Chase Capital Partners, said: "When we are looking at management teams we are looking for a mixture of industry experience and the industry in which they are trying to compete."
Mr Oxley is in charge of at least £200m earmarked for European internet investments as well as a further £100m in Britain. The latter is in a fund established earlier this month called Chase Episode 1 and is being managed by Simon Murdoch who was nabbed from Amazon.com.
Next on Mr Oxley's investment criteria list is the need for an internet or technology firm to be the first in its chosen market. There is also the requirement for the product or concept to be unique.
Mr Cohen offers an example from the 1980s to support the need for a company to be a "first mover" in its market.
He said that in the 1980s there were 93 venture-backed companies trying to be number one in the personal computer market. The four to have survived are leading brands in today's PC market.
"There are more internet companies being funded than eventually will exist," said Mr Cohen. "It's like 100 horses entering a race and each has the same odds as the favourite."
Another criterion is speed.
"The failure may be that somebody did not get there first and not that it wasn't a good idea," Mr Gagen said. "In the end in any market there will only be one or two players of real scale."
