Could it really have been so simple? Not so long ago, a couple of guys would come up with an idea for an internet start-up, have a lot of cash thrown at them to buy brand recognition, and as much time as they wanted in which to become profitable. Taking their cue from the US, most dot.com companies over here tried to get one round of seed funding followed by two or three rounds of venture capital to tide them over until flotation.

Not any more. As venture capital becomes thinner on the ground and valuations of floated start-ups consistently fail to set the market alight as they once did, the "trade sale" is back in fashion. Selling off the business is fast becoming part of the long-term plan, rather than a necessary measure after suffering bankruptcy further down the line.

In the summer, an ill wind began blowing away the prospects of many a UK and European dot.com company. Boo.com, ClickMango, ToyCity and most recently Dressmart.com all joined the growing list of start-ups running out of cash, as PriceWaterhouseCoopers promised many would, in its report in May.

Now, more research published by the management consultancy last week suggests time is also running out for start-ups to fulfil any aspirations of growth and market share, as the period allowed for profitability begins to shrink rapidly. "Dot.coms are no longer able to coast along on the promise of profits without making any money," the report says. "While this pressure has been growing for some time and there have been some high-profile dot.com failures, many are only now realising they are soon to be judged on a traditional price/earnings ratio. The time-scale is three years and closing."

Many have begun to recognise that only a trade sale will put them in a position to cope with these new demands, and this summer has seen a number of high-profile deals.

First Tuesday, the networking organisation responsible for galvanising so many dot.com ideas on this side of the Atlantic, was sold to an Israeli venture underwriter, Yazam, in July for $50m.

Co-founder John Browning, says the company decided to sell despite offers of venture capital, because the prospect of faster growth via an established infrastructure was so attractive. "The sale gave us more global offices, in-house expertise and more product offerings. We could have tried this on our own, but it would have taken a year. And in this market, a year is a long time."

It also meant bypassing the ordeal of having its intangible services put through the City wringer to seek a subjective valuation. Browning says many industry watchers missed the point and accused First Tuesday of "selling out", rather than just selling.

Somehow, amid the hype of the e-commerce explosion, a myth got written into industry folklore: nothing less than an initial public offering will do. The IPO would be the exit strategy of choice, converting the founders' paper millions into real ones and returning the venture capitalists' stake - plus some.

However, a focus on US trends, encouragement from investment banks, venture capitalists and incubators plus hype from the press all played a part in sustaining this myth.

Robert Conway of PriceWaterhouseCoopers financial advisory services agrees. "In Silicon Valley, everyone wants to float on Nasdaq. Six months ago everyone thought that would happen here. Now the bubble has burst, you can't IPO a company without a robust revenue stream."

A company that came to exemplify the trials and tribulations of bringing a start-up to market is the UK video-on-demand provider, Yes TV. In April, following the correction in telecoms media and technology stocks, it twice put off a £560m flotation on the Stock Exchange. Forced to cut the intended flotation price by 30%, it scrapped the offering the following month, just two days before trading was scheduled to commence.

Similarly, Chello Broadband, the internet service provider owned by Dutch cable company United Pan-Europe Communications, spent months preparing to float on the Amsterdam stock exchange, then opted for a merger with the non-US assets of Excite, in July.

But for Ace-Quote, an UK-based online marketplace for the IT and telecoms industries, the decision to sell came much earlier. It was first approached just before Christmas by DCI, a successful German company, operating in the same industry and listed on the Neuer Markt exchange, after only six months' trading, and while still searching for first round venture capital. The founders finally gave in to DCI's advances in May for £33m.

"We never got to the VC part," recalls Helga St Blaize, co-founder of Ace-Quote. "But we certainly saw how difficult it was going to be to get funding. We knew dot.coms would have to start behaving in a grown-up fashion." This desire to be seen to be grown-up has prompted others to consider a trade sale, an option sought by both private and already floated companies, particularly the rapidly consolidating European internet service provider sector.

Enter World Online. The Dutch ISP that floated on the exchange steeped in ignominy in March, saw its shares dive from their initial € 43 to as little as € 10 in May, after it emerged that founder Nina Brink had sold a substantial part of her stake before the IPO. Now the loss-making ISP is considering an offer from Italian giant Tiscali.

Gerry Montanus, senior partner at Atlas Ventures, sees both offensive and defensive trade sales as a growing consideration over the coming year. "It is more of a challenge now than in the past, to get private funding. For listed companies with high market capitalisation, it will be advantageous to them to pick up companies operating in areas they want to access."