The news that netimperative.com has begun liquidation proceedings is the second shock for dot.com investors in a matter of days. Only last week Boo.com, the UK e-tailer, announced it was facing collapse after failing to secure future funding.
The warm glow that investors felt as they watched their internet and technology shares soar in February and March has given way to horror as valuations have plummeted.
Even good quality shares with real earnings rather than deepening losses have been hit by the change in sentiment.
The technology, media and telecoms (TMT) sector is not just focused on e-tailers, but each new announcement that a dot.com company is struggling has a knock-on effect on new economy shares in general.
After a report last week suggesting that many ecommerce companies were burning cash so quickly that they would run out of money within six months, there was more bad news today with the release of a report claiming that Britons had shown less interest than forecast in buying online.
The problem for the dot.com companies, particularly those which are selling to the consumer rather than business, is the high cost of building a brand in a short timescale.
The marketing costs are huge, and many ecommerce sites do not expect to make money for four or more years.
Until now, this had not been a problem, as investors and venture capitalists were willing to tolerate large initial losses in the hope of owning a part of a new company which would one day dominate online retailing.
But the fall in the price of technology shares and fears about how much profit the e-tailers can hope to make means the City is becoming much more cautious about providing more money when the first batch of funding runs out.
There will be more e-casualties, and some will fail not because they are failing to stick to their business plan or meet their targets, but simply because venture capitalists are becoming far more selective about where they spend their money, and the City has lost its appetite for providing loss-making companies with second-round funding.
Coupled with the continuing gyrations in the Nasdaq, the technology index in the US, there is likely to be more pain ahead for TMT investors.
