Have we gone from dot.com to dot.bomb, or is the internet market finally starting to grow up? Consider the evidence: collapsed internet clothes retailer Boo.com reportedly ended up going for just £250,000 in a fire sale this month. Initial public offerings, once the glitzy debutante balls of the net business world, are being pulled. Even launches of high profile web brands like search site AltaVista have been postponed.

With a PriceWaterhouseCoopers report predicting that up to a quarter of British dot.coms may fail in coming months due to poor management structures, investors are spooked in the technology and internet sector. Since the April 14 market fall, Britain's Techmark index of technology companies has dipped up to 50% below March levels, the Nasdaq has dropped to 40% below peak, and the German Neuermarkt has been up to 35% off. Lastminute.com which opened with such high hopes when it floated in March at an issue price of 380p, was hovering around 160p-170p this week.

Many analysts feel it's a case of the market finally realising net companies need to put some business into the business plan.

"It may be a new economy, but you can't buck certain basic business tenets," says John Soder, co-author of the PriceWaterhouseCoopers report. The problem isn't just the vast amount of cash the typical internet company seems to need. "Start-ups are about spending money," he says. "The important thing is that they clearly know what they're spending it on."

For many dot.coms, the cash seems primarily to have gone towards lavish and often unjustifiable advertising budgets, particularly in the US. The ads fueled the hype, which accelerated the speed at which a dot.com could go public and investors cash in.

Britain was only just beginning to get a taste of this IPO fever before the crash. In Silicon Valley, the IPO has been a fetish event for years, a rite of passage into the macho land of shares, dividends and Nasdaq nomenclature. Dot.com mania encouraged quick IPOs by companies that had been in existence less than a year; companies were even announcing the probable timetable for their IPO at their launch parties.

So now, many pre-IPO companies actually say the downturn is a relief. "The IPO was starting to be an event that was far out of proportion to a company's history," says Jamie Rapperport, CEO of Silicon Valley office administrator portal Officeclick.com. "I wouldn't want to go public now. But I think, that's fine. You continue to grow your business. In a way, this helps more than it hurts. Things were getting a little frothy, to say the least."

"If you're seriously building a business, the IPO is just a marker, not the summit," says Mike Feenwick, director of British communications portal Yac.com. In March, he indicated that Yac.com might go public later this year. Now, he says, such a move would be extremely ambitious. "I think a lot of companies are going to IPO too early," he says. "New companies with young management can be led into it - the public always likes an IPO."

Such public sentiment can be valuable for a new company, says Mike Newlands, CEO of California online pioneer Wine.com. "A successful IPO certainly gives a lot of momentum, not just on the finance side, but on the whole event side," he says. "There's a lot of energy, and it can be very strong as a branding element. But the hype about it had gotten out of control."

Newlands claims that the market drop "is very good for a company like ours" because it lets them shine against companies with weak management and no vision. "Before, companies without long term, viable business models were getting funded," he says. Now, those will die off, leaving a leaner, more realistic net business landscape.

Or, they won't get funded in the first place. Since the market drop, venture capital firms have grown insistent upon solid business plans, according to many media reports. But one Silicon Valley entrepreneur says the money men and women have never cared much about the standard three-page business plan that all Valley net mil lionaire hopefuls cart around the VC offices. "It's just a little test that proves you're serious," he says, so you have to have it.

Having gone through the search for funding himself - and failed, only to see a group with the same idea receive $25m - he says VCs place more value on who makes up the management team, which he didn't realise at the time. After all, truly new ideas are rare.

So when will the pre-IPO crowd go to market? Steve Cole, founder and director of UK retail site Streetsonline. co.uk, reflects the CEO consensus: "We'll go to the market when the time is right and it can really give us value for what we have to offer. It won't do that right now."

After 14 years in the software business, Cole is philosophical. "The present-day corrections are indicative of a bit of overheating," he says. "During that overheating process there were funding mistakes. It's no different from the hardware market of the 80s. But out of this will come the Logicas, the Ciscos, the Apples, the IBMs of this sector. The good companies always win through."

Newlands agrees. "Companies with good models will always be able to go to market." Even the still- effervescent dot.coms?

"Both consumers and business have spoken - the internet is an important part of the future of industry."